Hamza Ikhlaq
With the year 2020 coming to an end, Pakistan – a country that has long been tied up in loans and debt along with a hard blow due to the current pandemic – is predicted to have an economical growth ranging from 1-2.5% for the current fiscal year.
A recent statement by The State Bank of Pakistan further solidified this report. However, the notion of how long Pakistan can maintain its holding and what lies for the future financial situation for Pakistan is still in an intermediate standing. With such feats in terms of growth, Pakistan has procured a very high amount of National debt ranging from loans taken from the IMF, China, France, Saudi Arabia, and Japan along with Grants requested from the United States.
Pakistan’s total debt has surpassed to be more than a record-breaking $228 billion. Though the current government of Pakistan has assured to heal this crippling debt as $1 billion were repaid to Saudi Arabia with help of grants provided to Pakistan by China. This has resulted in Pakistan paying back old loans by taking up new ones, creating a cycle that keeps on accumulating a higher percentage of the debt at every turn. Along with this, Pakistan has simultaneously seen a surge in taking foreign loans by more than 45% in just the first five months of the current fiscal year.
Many experts fear that this may cost Pakistan to face lower national savings, higher interest rates, with heavy taxations levied on the citizens and local industries. Especially during troubled times due to the ongoing Pandemic, its effect on the Economy may be costly in the long run. PM Imran Khan’s appeal in the United Nations to help write off the National debt has also failed to meet its objectives with not much change to the cash-strapped economy.
If Pakistan is to maintain its foothold and prevent a hard-hitting slump from occurring, then it is vital for the government of Pakistan must ensure its focus on the country’s export and productivity of local industries. With the possibility of the Pandemic coming to a near end, the importance of maintaining strong diplomatic ties for foreign investment is stronger than ever. Yet the core method and concrete solution for Pakistan’s troubled economy is a subject that is still up for debate.
Disclaimer: Views expressed in this article are those of the author and Balochistan Voices not necessarily agrees with them.
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