Choice Between Domestic and Foreign Debt: A Case Study of Pakistan

Ghazala Zafar Lashari; Muhammad Akbar; Ruhma Khan

doi:doi:10.11648/j.ijefm.20170506.12

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Choice Between Domestic and Foreign Debt: A Case Study of Pakistan

Ghazala Zafar Lashari, Muhammad Akbar, Ruhma Khan

Published in International Journal of Economics, Finance and Management Sciences (Volume 5, Issue 6)

Received: 28 July 2017 Accepted: 8 August 2017 Published: 15 November 2017

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Abstract

In Pakistan, domestic debt, foreign debt and debt servicing is the most discussed issue among the economists and policy makers. Pakistan has been taking a substantial amount of money in the form of domestic and foreign debt since 1970’s. Most common reason of debt dependency is saving-investment gap and revenue–expenditure gap. To fill these gaps, debts has become a common source. High level of debt servicing left no room for policy makers to carry out macroeconomic reforms in order to increase GDP growth rate. The present study has been conducted to investigate the choice between domestic and foreign debt in promoting economic growth. Auto regressive Distributed Lag (ARDL) approach has been used in the study for the data set from 1972-2010. It is found that both foreign and domestic debt servicing have negatively influenced the economic growth. In the light of the findings of this study, it is suggested that Pakistan should not rely on both external and internal debts to fulfill its gaps. Policy makers should use the policy of maximum revenue generation through domestic resource utilization, divert public expenditure from consumption to investment, promote tax culture and investment in human capital is much needed to reduce dependence on debts.

Published in	International Journal of Economics, Finance and Management Sciences (Volume 5, Issue 6)
DOI	10.11648/j.ijefm.20170506.12
Page(s)	284-293
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Domestic Debt, Foreign Debt, Debt Servicing, Real GDP, ARDL

References

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Ghazala Zafar Lashari, Muhammad Akbar, Ruhma Khan. (2017). Choice Between Domestic and Foreign Debt: A Case Study of Pakistan. International Journal of Economics, Finance and Management Sciences, 5(6), 284-293. https://doi.org/10.11648/j.ijefm.20170506.12

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ACS Style

Ghazala Zafar Lashari; Muhammad Akbar; Ruhma Khan. Choice Between Domestic and Foreign Debt: A Case Study of Pakistan. Int. J. Econ. Finance Manag. Sci. 2017, 5(6), 284-293. doi: 10.11648/j.ijefm.20170506.12

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AMA Style

Ghazala Zafar Lashari, Muhammad Akbar, Ruhma Khan. Choice Between Domestic and Foreign Debt: A Case Study of Pakistan. Int J Econ Finance Manag Sci. 2017;5(6):284-293. doi: 10.11648/j.ijefm.20170506.12

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@article{10.11648/j.ijefm.20170506.12,
  author = {Ghazala Zafar Lashari and Muhammad Akbar and Ruhma Khan},
  title = {Choice Between Domestic and Foreign Debt: A Case Study of Pakistan},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {5},
  number = {6},
  pages = {284-293},
  doi = {10.11648/j.ijefm.20170506.12},
  url = {https://doi.org/10.11648/j.ijefm.20170506.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20170506.12},
  abstract = {In Pakistan, domestic debt, foreign debt and debt servicing is the most discussed issue among the economists and policy makers. Pakistan has been taking a substantial amount of money in the form of domestic and foreign debt since 1970’s. Most common reason of debt dependency is saving-investment gap and revenue–expenditure gap. To fill these gaps, debts has become a common source. High level of debt servicing left no room for policy makers to carry out macroeconomic reforms in order to increase GDP growth rate. The present study has been conducted to investigate the choice between domestic and foreign debt in promoting economic growth. Auto regressive Distributed Lag (ARDL) approach has been used in the study for the data set from 1972-2010. It is found that both foreign and domestic debt servicing have negatively influenced the economic growth. In the light of the findings of this study, it is suggested that Pakistan should not rely on both external and internal debts to fulfill its gaps. Policy makers should use the policy of maximum revenue generation through domestic resource utilization, divert public expenditure from consumption to investment, promote tax culture and investment in human capital is much needed to reduce dependence on debts.},
 year = {2017}
}

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TY - JOUR
T1 - Choice Between Domestic and Foreign Debt: A Case Study of Pakistan
AU - Ghazala Zafar Lashari
AU - Muhammad Akbar
AU - Ruhma Khan
Y1 - 2017/11/15
PY - 2017
N1 - https://doi.org/10.11648/j.ijefm.20170506.12
DO - 10.11648/j.ijefm.20170506.12
T2 - International Journal of Economics, Finance and Management Sciences
JF - International Journal of Economics, Finance and Management Sciences
JO - International Journal of Economics, Finance and Management Sciences
SP - 284
EP - 293
PB - Science Publishing Group
SN - 2326-9561
UR - https://doi.org/10.11648/j.ijefm.20170506.12
AB - In Pakistan, domestic debt, foreign debt and debt servicing is the most discussed issue among the economists and policy makers. Pakistan has been taking a substantial amount of money in the form of domestic and foreign debt since 1970’s. Most common reason of debt dependency is saving-investment gap and revenue–expenditure gap. To fill these gaps, debts has become a common source. High level of debt servicing left no room for policy makers to carry out macroeconomic reforms in order to increase GDP growth rate. The present study has been conducted to investigate the choice between domestic and foreign debt in promoting economic growth. Auto regressive Distributed Lag (ARDL) approach has been used in the study for the data set from 1972-2010. It is found that both foreign and domestic debt servicing have negatively influenced the economic growth. In the light of the findings of this study, it is suggested that Pakistan should not rely on both external and internal debts to fulfill its gaps. Policy makers should use the policy of maximum revenue generation through domestic resource utilization, divert public expenditure from consumption to investment, promote tax culture and investment in human capital is much needed to reduce dependence on debts.
VL - 5
IS - 6
ER -

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Author Information

Ghazala Zafar Lashari

Department of Economics, Women University of Azad Jammu and Kashmir Bagh, Bagh, Pakistan
Muhammad Akbar

Department of Economics, Bahauddin Zakariya University, Multan, Pakistan
Ruhma Khan

Institute of Management Sciences, Bahauddin Zakariya University, Multan, Pakistan

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APA Style

Ghazala Zafar Lashari, Muhammad Akbar, Ruhma Khan. (2017). Choice Between Domestic and Foreign Debt: A Case Study of Pakistan. International Journal of Economics, Finance and Management Sciences, 5(6), 284-293. https://doi.org/10.11648/j.ijefm.20170506.12

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ACS Style

Ghazala Zafar Lashari; Muhammad Akbar; Ruhma Khan. Choice Between Domestic and Foreign Debt: A Case Study of Pakistan. Int. J. Econ. Finance Manag. Sci. 2017, 5(6), 284-293. doi: 10.11648/j.ijefm.20170506.12

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AMA Style

Ghazala Zafar Lashari, Muhammad Akbar, Ruhma Khan. Choice Between Domestic and Foreign Debt: A Case Study of Pakistan. Int J Econ Finance Manag Sci. 2017;5(6):284-293. doi: 10.11648/j.ijefm.20170506.12

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@article{10.11648/j.ijefm.20170506.12,
  author = {Ghazala Zafar Lashari and Muhammad Akbar and Ruhma Khan},
  title = {Choice Between Domestic and Foreign Debt: A Case Study of Pakistan},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {5},
  number = {6},
  pages = {284-293},
  doi = {10.11648/j.ijefm.20170506.12},
  url = {https://doi.org/10.11648/j.ijefm.20170506.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20170506.12},
  abstract = {In Pakistan, domestic debt, foreign debt and debt servicing is the most discussed issue among the economists and policy makers. Pakistan has been taking a substantial amount of money in the form of domestic and foreign debt since 1970’s. Most common reason of debt dependency is saving-investment gap and revenue–expenditure gap. To fill these gaps, debts has become a common source. High level of debt servicing left no room for policy makers to carry out macroeconomic reforms in order to increase GDP growth rate. The present study has been conducted to investigate the choice between domestic and foreign debt in promoting economic growth. Auto regressive Distributed Lag (ARDL) approach has been used in the study for the data set from 1972-2010. It is found that both foreign and domestic debt servicing have negatively influenced the economic growth. In the light of the findings of this study, it is suggested that Pakistan should not rely on both external and internal debts to fulfill its gaps. Policy makers should use the policy of maximum revenue generation through domestic resource utilization, divert public expenditure from consumption to investment, promote tax culture and investment in human capital is much needed to reduce dependence on debts.},
 year = {2017}
}

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