‘Pakistan facing difficult situation due to external debt’

KARACHI: Pakistan from the point of view of external debt is facing real difficult situation as it is among the 15 countries globally which are in enormous debt stress. We have to get rid of such circumstances as soon as possible, said Ateeq ur Rahman, economic & financial analyst.

He said it is not only the external debt but also the government is facing soaring domestic borrowing cost due to ballooning high policy rate, which remains in the negative territory at 21%. We fear that borrowing cost would rise even further, he added.

He mentioned the Pakistan’s external financing need for fiscal year 2024 is around US 40 billion dollars whereas Pakistan has external debt repayments amounting to $ 30 billion (including interest payments). Hence Pakistan’s current account deficit is always dwindling.

Pakistan financing options beyond June 2023 are highly uncertain and hard, he said. Pakistan can be placed amongst the 45% of low income countries at high risk of debt stress and a country facing borrowing at very high interest rates.

He said: “This is a real crunch; it looks as if country continues to brace financial shortages without any solutions. We need to cut down our expenses at all levels and practice simplicity at every nook and corner of our dealings.”

Copyright Business Recorder, 2023