Why The Debt-to-GDP Ratio Has Fallen

For sure it didn't happen by reducing wastage levels. Nope. That we know from reading the damning government audit report year after year. Instead, the Finance Minister did it mostly by never spending many of the billions he had budgeted over the last 4.5 years in typical bean-counting tradition:

1. The Empowerment fund has spent only Rs800 million over a 3-year period instead of the 1-billion-rupees-a-year pledge. That's Rs2.2 billion 'saved'.

2. By making us pay Rs3 billion for an apparent hedging mess at the STC through much higher pump prices than would warrant prevailing oil market prices.

3. Announcing 6 Rs1-billion funds in the June 2008 budget (Food security fund, Human Resource, Knowledge and Arts fund, MID fund, etc) but spending only a small fraction of them.

4. Not spending enough of the last 4-5 capital budgets.

5. Repackaging paragraph 271 as an additional stimulus package and setting aside a few more billions which were never to be spent.

6. VAT of 15% was kept on oil prices throughout the period they went all the way to USD147 a barrel. For instance VAT receipts on oil prices doubled from Rs1.65 billion to Rs3.3 billion in 12 short months from 2006 to 2007.

7. Depreciating our currency.