Islamabad: Pakistan has been plagued by concerns that the country’s condition will be similar to that of Sri Lanka in the coming months. When the debt burden on Pakistan has increased tremendously, new loans must be taken at high-interest rates to run the country. Most new loans have to be used to repay the loans taken earlier. Therefore, the Pakistani media is claiming that the country’s situation will be worse than in Sri Lanka.
In the financial year 2020-21, Pakistan borrowed $13.38 billion. But in the first quarter of the financial year 2021-22, Pakistan had to borrow about $10.886 billion. Thus, Pakistan’s debt is increasing tremendously. This is because Pakistan has to spend a lot of the new loan only to repay the debt it had taken earlier. Also, given the mountain of debt in the country, borrowers are giving loans to Pakistan at high interest, saying that the risk has increased.
In this scenario, Pakistan had a lot of expectations from the International Monetary Fund (IMF). Pakistan had demanded a bailout package of $6 billion from the IMF. But the IMF has denied the loan to Pakistan. This is because the IMF instructed Pakistan to reveal the exact amount, interest rates and terms of the loans borrowed from China. It is said that the IMF also put conditions like reduction in defence expenditure and increased prices for electricity and fuels to increase government revenue.
But the Pakistan government is not willing to accept these conditions. Thus, it seems Pakistan has again reached out to China for loans. Pakistan’s new Prime Minister Shahbaz Sharif, is expected to visit China soon for this. Currently, Pakistan’s foreign exchange reserves are less than $10 billion. This includes loans from other countries. These countries can withdraw this fund from Pakistan at any time.
In such a situation, the Pakistan government is trying to save the country by simultaneously reaching out to the IMF and China for help. But the IMF has taken a tough decision not to help Pakistan anymore. Therefore, the World Bank and Asian Development Bank also have stopped Pakistan’s funding. As a result, China is taking full advantage of Pakistan’s helplessness and is lending to Pakistan by raising interest rates.
If such a situation continues, Pakistan will have to repay the loan by selling the country’s assets to China. Pakistan’s media is beginning to acknowledge this and Pakistani news channels are warning that the condition of their country will be worse than Sri Lanka. ‘A neighbour like India is providing aid worth billions of dollars to Sri Lanka and is supplying thousands of metric tonnes of wheat to Afghanistan. But Pakistan is dancing to the tune of the IMF for a loan of $1 billion. Still, the IMF is unwilling to lend to Pakistan,’ Rana Sanaullah, the Minister for Interior of Pakistan, said.
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