Pakistan sinking deeper in debt – Economists sound an alarm

Islamabad : Asian Development Bank (ADB) has offered a loan of 5.9 billion dollars to Pakistan. Pakistan has asked for an 800 million dollar loan for its energy sector. Till the month of May 2016, the total debt burden on Pakistan has gone up to 1340.30 billion dollars, of which 58.34 billion dollars are in the form of overseas borrowings. Responsible economists in the country are sounding alarm that in the coming days, Pakistan will find it more and more difficult to repay the interest on the loan which it has taken at steep interest rates and that it will sink deeper in the debt.

ADB has shown readiness to offer a loan of 5.9 billion dollars to Pakistan over the next three years. ADB has indicated that Pakistan will get the loan for developing the energy, agriculture and infrastructure sectors, whereas Pakistan is asking for a loan of 800 million dollars from ADB, for developing its energy and other sectors. Responsible economists in Pakistan are warning that Pakistan should think twice before asking for a new loan, when it is becoming difficult for Pakistan to pay even the interest on the existing loans.

Economists have raised serious concerns about the borrowings made by Pakistan in February at steep interest rates. They had warned that, to pay the interest on these borrowings, fresh loans will be required. Some have even alleged that Pakistan is repaying the installments of the old borrowings by resorting to fresh borrowings. The debt burden on the Pakistani economy has gone up to 74 lakh crore rupees. In the financial year 2014-15, this debt had increased by a whopping 13.2%. The Pakistani economy does not have the capacity to repay such enormous borrowings. Due to this, the Pakistani media is expressing concerns that this will become a crushing burden for the country.

The Pakistani Prime Minister Nawaz Sharif had claimed that Pakistan is on the course of development. The Finance Minister Ishaq Dar also had assured that the economy was progressing well. But analysts and economists are criticising that these claims are misleading and that the Nawaz Sharif government has taken the country to such a level that several future generations of Pakistan will be burdened with debt. Also, the Prime Minister Nawaz Sharif and his government are taking the entire credit for the 46 billion dollar investment done by China in the ‘China-Pakistan Economic Corridor’ project. But in this investment, the borrowings from China, made at huge interest rates are substantial and concerns are being expressed that this could tighten the noose around Pakistan’s neck. It is regularly alleged that there is no transparency about this project and responsible economists are expressing fear that in the near future, Pakistan could collapse due to severe financial crisis.

The Pakistani economy is not left with the ability to repay borrowings made from International Monetary Fund and other international financial institutions. The Pakistani economy cannot even achieve a growth rate of 4%. Even under these circumstances, the Pakistani army is not willing to cut down the defense expenditure since Pakistan is weakened by terrorism and extremism along with violence, hence the development in its Industry sector has come to a standstill. In these circumstances, the USA has withheld the aid of 300 million dollars, which was to be given to Pakistan for fighting terrorism. In the future also, there is no possibility that the USA will provide aid to Pakistan. “So how will Pakistan repay its debt?” “Does our country have the ability to repay even the installments of interest?” Pakistan Government is refusing to answer these questions asked by its economists.

Pakistan government is trying to hoodwink everyone by presenting the large numbers of the Chinese investment. But this game of deception cannot last for long. Responsible economists are warning that the axe of debt will fall one day on Pakistan and the country will collapse.