“Pakistan’s Debt Exceeds $130B, 352% of Exports: World Bank”

Pakistan's External Debt

Pakistan’s External Debt Surpasses $130 Billion.

A Growing Economic Concern:

  • External Debt Exceeds Exports

Pakistan’s external debt has surpassed $130 billion, exceeding its average annual exports by 352%.

  • China Leads in Pakistan’s Debt

China holds the biggest portion of Pakistan’s debt, representing almost 22% or $28 billion of the overall debt.

  • Rising Debt Per Person

In 2011, the debt per newly born Pakistani was around 70,000 PKR, but this has now surged to over 321,000 PKR, marking a 4.5 times increase.

Pakistan's External Debt
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Pakistan’s Debt Burden: Regional Context

  • High Debt Repayment in the Region

According to the latest World Bank report, Pakistan is the second-largest country in South Asia, after India, with the highest debt repayment burden. In just one year, Pakistan’s debt burden has increased by $3 billion.

  • Significant Loans from the World Bank & ADB

The World Bank remains one of the largest creditors to Pakistan, with the debt from the institution representing 18% of the total debt. The Asian Development Bank (ADB) holds 15%, & Saudi Arabia’s debt amounts to 7%.

  • China’s Debt Share Declines

While Pakistan owes a significant portion to China, this share has decreased slightly, falling from 25% to 22%.

Pakistan's External Debt

Impact on Pakistan’s Economy & Future Outlook

  • Declining GDP & Increasing Debt

Pakistan’s GDP has been declining, while its external debt has grown significantly. Experts, including economist Ammar Habib, highlight that the external debt has doubled in the last 12 years, a period during which Pakistan’s GDP has consistently shrunk.

  • Challenges in Repayment Capacity

Experts argue that Pakistan’s ability to repay debts is weakened due to low income and GDP. The rising debt requires Pakistan to take on more loans, further deepening the debt cycle.

Pakistan’s External Debt Political & Economic Implications

  • Political Compromises Due to Debt

High debt levels force Pakistan to make political compromises, particularly with countries that lend heavily, such as China, Saudi Arabia, & those involved with the IMF and World Bank.

  • Limited Investment in Public Projects

Dr. Abdul Azim Khan notes that foreign loans have primarily been used for government expenses & debt repayment rather than public investments, further hindering economic growth.

Solutions for Economic Stability

  • Export-Led Growth Needed

Experts suggest focusing on “export-led growth” to reduce dependency on foreign loans. Promoting industries with international demand & creating a skilled workforce are key strategies for achieving economic stability.

  • Improving Infrastructure & Local Industries

Investing in local industries, reducing energy costs, and providing better infrastructure will be crucial for sustainable economic growth in Pakistan.

Stay tuned with ZAFF Trends for more updates on these pivotal developments.

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