Pakistan is trapped in debt crisis for quite some time and, as ever, this crisis is affecting the vulnerable communities of the country. The approach of borrowing from local and foreign monetary institutions to meet the state’s expenses has made the debt situation of Pakistan only worse. Trading Economics recently published data about Pakistan’s debt crisis, which indicate that the country’s external debts will soon cross a staggering amount of $75 billion.
Many analysts believe that the government should not rely much on foreign institutions, instead focus should be given on increasing exports to generate revenues. Domestic borrowings are often not taken into account by trade analysts because its effects on the economy are fewer, if compared with foreign borrowings, and the government could simply drop currency value for the repayment of local loans.
In this debt crisis, the fiscal year of 2016 set a new record as the country’s foreign debts swelled up to $72.98 billion after taking fresh loans of $7.9 billion.
In the next 18 months, Pakistan has to pay $11.5 billion to several countries and foreign institutions, including:
- $160 million (in Saudi Riyals) to Islamic Development Bank (IDB)
- $8.76 billion to World Bank, International Monetary Fund (IMF) and Asian Development Bank (ADB)
- $1.6 billion to China
- 192 billion Yen to Japan
- 625 million Euros to Paris Club
Along with the debt repayment problem, government should also take into account the impact of debt crisis on domestic policies and programs. Experts believe that the increasing national debt is not only a big threat to domestic programs but it also adversely affects Pakistan’s credit ratings, and countries with poor credit ratings cannot attract local or foreign investments.