Pakistan's debt and liabilities increase; govt 'doesn't have money': What's next for the debt-ridden nation?

WION Web Team
New Delhi, India Published: Nov 26, 2021, 05:21 PM(IST)

Imran Khan Photograph:( AFP )

Story highlights

For the first time ever, Pakistan's total debt and liabilities crossed 50.5 trillion Pakistani rupees (PKR), reveals a report. How much does each Pakistani citizen owe? 

A couple of days back, Pakistan Prime Minister Imran Khan said the "biggest problem" is that the government doesn't have enough money to run the country. He added that the rising foreign debts and low tax revenue had become an issue of "national security". 

Imran Khan said, "We don't have enough money to run our country due to which we have to borrow loans." A day after Khan described the increasing debt as a "national security issue", the State Bank of Pakistan (SBP) released the debt figures till September 2021. 

For the first time ever, Pakistan's total debt and liabilities crossed 50.5 trillion Pakistani rupees (PKR) - approximately $283 billion. It is an addition of PKR 20.7 trillion under the current government alone, Pakistan-based newspaper Express Tribune reported citing SBP data. 

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The figures have shown that the total debt and public debt of Pakistan have deteriorated during the current Pakistan Tehreek-e-Insaf (PTI) government. 

As per the mentioned newspaper, in June 2018, every Pakistani owed PKR 144,000. But now, it has increased to PKR 235,000 by September 2021. The increase is an additional burden of PKR 91,000 or 63 per cent during PTI's tenure. 

Two days after Khan's 'don't have money' remark, the International Monetary Fund (IMF) rejected Pakistan's borrowing request as it turned down the Pak government's proposal to allow it to take loans equal to 2 per cent of the gross domestic product (GDP) in a fiscal year. 

In a written reply to a question, the house was informed that the exchange rate depreciation added around PKR 2.9 trillion (20 per cent of the increase) in public debt while the government paid PKR 7.5 trillion against interest servicing which is 50 per cent of the increase in the total public debt, reported The News International, which is one of the largest English language newspapers in Pakistan. 

Inflation in Pakistan

The South Asian nation has been reeling with increased prices of food items. Inflation surged 9.2 per cent in October from the year before, according to government data. 

Food-price inflation is crushing commoners in Pakistan as the cost of basic food items shot up this month by 17 per cent year over year, government data show. 

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According to Muzzammil Aslam, a spokesman for the finance ministry, Pakistan imports about 80 per cent of its oil and diesel and about 35 per cent of its gasoline. 

The cost of electricity in Pakistan is already twice as much as in some of the neighbouring countries like India, China and Bangladesh. 

Mismanagement of funds?

When common people struggling to get basic food items, Islamabad allocated $7.85bn for defence and merely $151m for health in the budget for the financial year 2020-2021.  

Imran Khan recently said that due to lack of resources the government had little to spend on the welfare of the masses. He said due to failure to generate local resources, the successive governments resorted to loans.

The data from the Ministry of Economic Affairs showed that the borrowing was higher by $580 million, or 18 per cent, as compared to the loans obtained in the same period last year.

In a recent report, the World Bank noted that Pakistan has joined the list of top ten nations with the largest  foreign debts. 

The question here is - the borrowing has increased but it's not reaching the common people. Where most of the funds are going? 

Pakistan is caught in a vicious cycle as it needs to borrow new funds to pay the old ones.

The News International reported that the Imran Khan-led regime ideally required gross external financing of $51.6 billion within a two-year period (2021-2023) in order to fulfil its needs. 

Pakistan's gross external financing requirement stands at $23.6 billion in 2021-22 and $28 billion in 2022-23. 

Amid economic crisis, what's next for the debt-ridden nation?

1 PKR = 0.00567496 USD

1 USD = 176.213 PKR

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