Can’t expect the economy to recover under the total debt of Pakistan

Managing the economy of a country is a difficult task. It becomes more complicated when the country has an enormous burden of debt. The debt of Pakistan has now climbed to the sky. This, in turn, has led to the country’s economy being in shambles.

When did Pakistan’s debt begin?

It was in the 1970s that Pakistan witnessed a massive increase in debt for the first time. It happened due to a hike in oil prices & the government was unable to handle it. This is when the economy of Pakistan & people started to suffer from external debt.

The federal government has been provided with loans by the IMF in the past 30 years. It hasn’t stopped since. As a result, the debt of Pakistan was transferred from generation to generation. This allowed the IMF to overpower Pakistan’s economic progress.

For the second time, the debt of Pakistan increased in 2010. This time it happened due to devastating floods that destroyed on a large scale. The total debt of Pakistan went up from $30 billion in 2006 to $58 billion in 2011.

How much is the debt of Pakistan?

During July & November, the government borrowed Rs3.244 trillion from banks. The current borrowing is four times more than the Rs827 billion borrowed by the previous government.

Although government tax revenue was up so was the debt of Pakistan, which made the government struggle. The taxes are affecting ordinary citizens and businesses the most.

Pakistan’s Debtors

Pakistan owes money to several countries, some would surprise you. Mostly, rich countries like the USA, France, Canada, Saudia & China are on the list. The ones that may surprise you are Yugoslavia, Hungary & even Libya.

Debt challenges

The future of Pakistan’s economy seems to be challenging. The outcome of debt is evident in people’s lives. Soaring electricity, water & gas bills and the increase in the cost of living have made survival very difficult for an average citizen. The devaluation of the Pakistani Rupee has fueled the problem.

As the debt increases more & more, Pakistan is unable to formulate a strategy to repay these loans. This economic landscape is a cause of concern among people.

People are concerned about whether the government will be able to fulfill its financial obligations to sustain growth. Mounting depth is casting a shadow over the path of recovery.

Which path to choose?

Pakistan is suffering big time. There seem to be few choices to help the current situation. Either it can go back to the IMF or decide not to pay like a sovereign nation. There is no other option. The country is leaning towards the second option, sadly.

Final Thoughts

Pakistan’s federal government hasn’t done much to fix its situation. The problem is that will Pakistan be able to make changes, so they don’t need more help? It doesn’t look like it just yet.

This means that the current government has very little capital to invest in things that would solve the problems. People in charge benefit from the situation that we are in. So why would they make a change that would cost them their wealth & power?

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