Karachi: Pasban Democratic Party PDP Chairman Altaf Shakoor said Sunday that now the debt trap is really strangulating the economy of Pakistan and this deadly noose would be further tightened in the years to come.
He said in a statement that successive governments had taken costly loans from foreign lenders, especially the International Monetary Fund (IMF), for unnecessary projects and now what the nation earns goes to pay the principal amount and interests of these loans. He said this is vicious cycle and it is marring our already fragile economy.
He said experts say that Pakistan is in a political and economic death spiral that could push it over the same cliff as Sri Lanka, as internal conflict, regional instability, and global uncertainty all threaten the survival of the state. He said that Pakistan’s external debt servicing rose to USD 10.886 billion in the first three quarters of 2021-22 compared to USD 13.38 billion in the entire FY21.
The external debt servicing was just USD 1.653 billion in 1QFY22 against USD 3.51 billion in the first quarter of 2020-21. However, the debt servicing jumped to USD 4.357 billion in 2QFY22 and further to USD 4.875 billion in 3QFY22.
The increasing size of the external debt servicing in each quarter indicates the government has been borrowing dollars at higher commercial rates to meet its foreign debt repayment obligations.
Shakoor said Pakistan recorded a Government Debt to GDP of 84 percent of the country’s Gross Domestic Product in 2021, he said, adding that it is a very disturbing sign that what we earn almost goes to paying for debt and its interest.
He said this year the government has earmarked Rs3.95 trillion for interest payments and repayments on domestic and foreign loans (debt servicing), which is 41.57 percent or over two-fifth of the total budget outlay of Rs9.502 trillion for FY2023.
He said the country will spend Rs510.97 billion on foreign debt servicing and Rs3.439 trillion on domestic debt servicing. The government spent a huge amount of Rs3.555 trillion on public debt servicing in FY2022 as against the budgeted Rs3.059 trillion.
Shakoor asked if our Parliament is aware of this grim scenario, what the ‘institution’ are doing to save Pakistan from sinking into the sea of loans. Shakoor said if the trend continues in next few years we will pay all what we earn to our lenders. He said even a blind could see that Pakistan is running fast on the path of default, but the government, Parliament and ‘institutions’ are least concerned to this grim scenario.
He said a data should be compiled about all the foreign loans of Pakistan and interest paid on them to see how this poor nation has paid to cruel foreign lenders so far. Shakoor demanded to announce caping payment of all foreign loans and their interest for at least 10 years, so as to salvage the falling economy.
He asked for widening the national revenue base, besides boosting industry and agriculture to create much needed financial space to rid the nation and country from the shackles of foreign loans. He said all political parties and ‘institutions’ should join hands to let the country breaking this deadly debt trap.