The Economics of Stateless Nations: Sovereign Debt and Popular Well-being in Pakistan

Arshad Zaman


The conventional wisdom is that “persistent fiscal and balance
of payments deficits are a fundamental source of Pakistan’s high debt
burden” [Pakistan (2001), p. xv)].1 The State Bank of Pakistan (2001, p.
117) goes further: “This…public debt is the result of structural
weaknesses in the domestic economy and the external account. Excessive
government expenditures, stagnant tax revenues, high returns on
government securities and inappropriate sequencing of financial reforms,
led to a bludgeoning (sic.) domestic debt profile. On the external
front, large current account deficits, stagnant export revenues and
declining worker (sic.) remittances, effectively forced Pakistan into an
unsustainable situation”. All this is true, but hardly

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