Pakistan’s irresponsible economic policies responsible for massive debt service obligations: report
Update: April 26, 2022 10:55 p.m. STI
Islamabad [Pakistan]Apr 26 (ANI): Pakistan’s reckless economic policies and overspending, mainly under former Prime Minister Imran Khan, has led to unprecedented pressure on the country’s debt servicing and is exacerbating the current economic crisis , according to a media outlet.
Islamabad’s debt-to-GDP ratio had risen to 88% in 2020, which was the highest in the CAREC (Central Asia Regional Economic Cooperation) region, according to a recent report by the Asian Development Bank (AfDB), reported Islam Khabar.
Pakistan’s debt service needs were the highest, at $15 billion, the report said, adding that the country racked up more than $10 billion in new debt during the pandemic, according to the “COVID- 19 and the potential for economic recovery in the AfDB’s CAREC region. .”
According to the State Bank of Pakistan (SBP), the ousted PTI (Pakistan Tehreek-e-Insaf) government added more than PKR 18 trillion to public debt during its three and a half year tenure, the highest liabilities accumulated by a government in the country’s history. As a result, federal government debt jumped to PKR 42.8 trillion in February 2022.
The PTI government added PKR 14.2 billion/day on average to public debt compared to PKR 2.7 billion/day in 2008-18. Total public debt increased by 73% between September 2018 and February 2022. The situation is so alarming that the government was at the mercy of commercial banks which were paying interest rates of 12.7% to borrow money, said Islam Khabar.
The value of the Pakistani currency has depreciated too massively to over PKR 185 (from PKR 124.2 in August 2018) over the country’s 75-year history, resulting in an even higher cost of servicing foreign debt, according to the report.
Abid Hasan, a former member of the Pakistan Economic Advisory Committee and the Federal Board of Revenue Tax Reforms Group, noted that if Islamabad continued with a “business as usual” policy, it could end up receiving aid from Bangladesh within a decade.
“We are now drowning in debt and stuck in an orbit of anemic growth, and this will continue as no government has pursued the deep reforms needed to establish an economically strong Pakistan,” he added.
Against this backdrop, Pakistanis can expect very little respite to improve their living conditions, even as the Pakistani military continues to spend exorbitant sums on the defense sector, the report concludes. (ANI)