- Pakistan does not even have the money to pay off China’s debt
- The Imran government has borrowed more than 6 lakh 82 thousand crore rupees during its three-year rule.
- Domestic and foreign debt to Pakistan exceeds 50,000 billion rupees.
Prime Minister of Pakistan Imran Khan During his reign the country was mired in debt. The situation has worsened to the point where Pakistan does not even have the money to pay off China’s debt. Apart from China, Pakistan has also borrowed heavily from the United Arab Emirates (UAE), Saudi Arabia, the World Bank and the International Monetary Fund (IMF). Domestic and foreign debt to Pakistan exceeds 50,000 billion rupees. A year ago, every Pakistani had a debt of about 75,000 rupees.
China’s debt is sinking to Pakistan
China’s debt is exacerbating Pakistan’s already in abyss. Pakistan’s total external debt will cross US $ 14 billion by the end of this financial year. Half of this debt comes from commercial banks in China. Pakistan has borrowed mainly from these banks for projects related to the Belt and Road Initiative (PRI).
IMF and Finch warn of Pakistan’s debt
As early as April this year, the International Monetary Fund warned that Pakistan’s public debt stability was continuing to weaken due to policy failures and rising contingency debt. In May, Finch, an international rating agency, gave Pakistan a B-rating. Finch said the assessment was based on Pakistan’s weak public finances, weakness in external funds and the government’s failure.
The World Bank compares Pakistan with Sri Lanka
According to the World Bank Credit Report 2021, Pakistan is rated much worse than India and Bangladesh. According to the report, Pakistan is currently on par with Sri Lanka in debt. The report analyzes the debt of South Asian countries. China has also seized the port of Hambantota, trapping Sri Lanka in its debt trap. Not only this, China also has an impact on Sri Lanka’s foreign policy.
Does that mean declaring Pakistan a debt-free country?
Pakistan has never been declared a defaulter. Farooq Saleem, a Pakistani political scientist, economist and financial analyst based in Islamabad, told the Asia Times that Pakistan has never failed to repay international debt. Notice of non-repayment of the loan is always made by the lending agents. The company that lends you the money has the legal right to declare you non-performing. Usually, they do not declare a sovereign state a defaulter because doing so increases the risk of losing the money lent.
Debt of these countries and institutions on Pakistan
Pakistan’s treasury is already under pressure to repay $ 2.6 billion in debt from several countries, $ 9.1 billion in debt from Chinese state and commercial banks, and $ 1 billion in sukuk and $ 1 billion from the IMF. Pakistan owes $ 33.1 billion in multidisciplinary loans to the Paris Club and $ 12 billion to $ 12 billion in international bonds such as the eurobond and Sukuk. In addition, Pakistan has received $ 3 billion each from the United Arab Emirates and China. At the same time, another installment of $ 3 billion is going to meet Saudi Arabia.
Information on the total loan given to Parliament by Pakistan
Over the past three years, Pakistan’s debt has increased by 16 trillion rupees ($ 91 billion), Pakistan’s finance ministry told parliament on Friday. According to data released by the Ministries of Finance and Planning, Pakistan’s total debt rose from $ 25 trillion ($ 142 billion) in June 2018 to $ 41 trillion ($ 233 billion) by August 2021.
$ 42.4 billion in interest repayments
Pakistan’s Senate was told on Friday that domestic debt had increased from 16 trillion rupees ($ 91 billion) to $ 26 trillion ($ 148 million) during the period. Similarly, foreign debt increased from 8.5 trillion rupees ($ 48.3 billion) to 14.5 trillion rupees ($ 83 billion) over the same period. The government paid $ 7.46 trillion ($ 42.4 billion) in interest on these loans.
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