It is heartening to note that the country seems to have embarked on the path of reducing its loan requirements as it obtained $4.58 billion in loans from July 2024 to January 2025, which includes $2.32 billion received under agreements, $329.1 million from bilateral agreements, and $500 million from foreign commercial loans.
Additionally, investments worth $1.12 billion were made through the Naya Pakistan Certificates.
The total estimated financing for the current fiscal year is $19.39 billion. Compared to the previous year, Pakistan has seen a 30% decrease in financing during the same period. Last year, the country had borrowed $6.30 billion during the same time frame, according to the Economic Affairs Division. No doubt, it’s a highly significant decline.
In my view, the foregoing clearly suggests that there’s still a strong need for reducing borrowing from foreign sources. Managing the external debt is not only challenging, it’s also quite expensive.
One of the major reasons behind our rising external debt is the fact that there are not much savings and foreign investments. In other words, there exists no culture of savings in Pakistan. According to CEIC database, for example, country’s gross savings rate was measured at 6.3 percent in June 2024, compared with 6.3 percent in the previous year.
Having said that, I would like to ask whether or not the Economic Advisory Council that has presented a slew of recommendations to the federal government with a view to help it fuel the economy has also advocated the need for a critical examination of the saving functions so as to increase country’s gross savings rates.
Anila Malik (Karachi)
Copyright Business Recorder, 2025
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