Pakistan Debt Crisis IMF: External Debt Including China & Saudi Arabia Growing Faster
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Pakistan owes so much to whom
According to the IMF, China owes about $30 billion to Pakistan. While the total foreign debt on the country is 126 billion dollars. Another $3.5 billion aid will be given to Pakistan from China. Out of this, two billion dollars will be in the form of deposits. While $ 1.5 billion more will be given by Chinese commercial banks. On the other hand, Pakistan will get two billion dollars from Saudi Arabia and one billion dollars from UAE.
Apart from $ 250 million from the Asian Infrastructure Investment Bank, $ 500 million will also be available from the World Bank. According to the officials of the country’s Finance Ministry, the loan of $350 million promised during the Geneva Conference will also come to Pakistan. Pakistan has provided a financing plan for external payments to the IMF. In this, the IMF has been told that it will arrange eight billion dollars instead of six billion dollars for this purpose.
Country’s experts worried
Economy expert journalist Khurram Hussain has written in Pakistan’s newspaper The Dawn that whatever positive things have happened in the country, they have nothing to do with the IMF deal. But bond pricing reversals, stock market rally, exchange rate adjustments and increase in foreign exchange reserves seem to be linked to the success of the IMF deal. According to him, for the last 18 months, Pakistan is going through a political instability. Due to this the decision making process also got paralyzed. While the economy crept dangerously close to what could be termed as default.
Rapidly depleting foreign exchange reserves coupled with political uncertainty were fueling a wrong sentiment. Elections are also going to be held in the country. It looks like the country will be without a strong leadership at the time of elections in October and at the same time it will have to deal with the crisis of shortage of foreign exchange reserves. But the biggest question is that of debt.
fast growing debt
Pakistan’s foreign debt is increasing faster than its ability to repay it. According to Khurram, there are so many liabilities on the economy that the foreign exchange reserves will be exhausted in less than a year if the IMF does not help. In August 2021, the country’s foreign exchange reserves had reached $ 20 billion. Then it started declining from here. It has come down to $9.8 billion by June 2022, despite borrowing about $5 billion. Had the loan not been taken, the country might have been in plight.
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