SUMMARY of “Relying on debt,” Editorial, Dawn, October 3rd, 2023
Pakistan is facing a concerning debt crisis that could lead to severe consequences if it loses access to the loans that are currently sustaining its economy. The country is grappling with various economic issues, including high inflation, large fiscal deficits, low productivity in industrial and agricultural sectors, a fragile balance of payments position, and a weak exchange rate. Due to its inability to collect sufficient taxes and generate enough dollars to cover imports, Pakistan heavily relies on cash injections from foreign lenders and global institutions like the IMF and the World Bank. In fact, Pakistan was the top borrower of cheaper funds from the International Development Association (IDA) in South Asia, securing $2.3 billion in financing from the IDA during the last fiscal year. The country’s growing dependence on domestic and external loans is exacerbating its debt burden, with total public debt reaching 74.3% of GDP by the end of FY23. This mounting debt is hindering the government’s ability to address inflation and stimulate economic growth. Despite warnings from multilateral agencies and other countries, Pakistan’s leadership has not taken adequate measures or implemented sound economic policies to address these issues. Instead, they continue to seek bailouts from Gulf monarchies. While such investments may offer temporary » Read More…