Huge burden of foreign debt on Pakistan

Around more than 50 million people in Pakistan live below the poverty line. Efforts to tackle poverty and meet the Sustainable Development Goals ( SDGs) and vision 2025 of Pakistan are in tatters as the economy struggles to deal with the costs of seasonal floods, the ‘war on terror’ and the huge burden of foreign debt. Pakistan’s government foreign debt burden has doubled since 2006 to $58 billion. It warns that annual repayments are set to increase dramatically to $6 billion a year – over 20% of export revenues, and more than half what Pakistan currently spends on health and education combined.

Like other underdeveloped countries of the world, Pakistan also depends heavily on external resources to make their nations developed and prosperous. This foreign assistance can be in the shape of interest bearing debt, aid, foreign direct investment, provision of skilled manpower and transfer of technical skills but there is need to identify the problems necessitating foreign debt. Further it is to examine the impact of foreign debt on macroeconomic variables empirically and to investigate the impact of foreign debt on common man.

Among other major reasons , governments used foreign resources to fix the external payment gaps but they did not adopt complementary policy reforms. These are the reasons that debt position of Pakistan worsened very rapidly. It is very important to trace time dimension of these two decades in relation to debt burden and debt servicing to GDP ratio with some other important indicators of external debt and liabilities.

If Government really wants to impact on common person life, they should to reduce the expenditures on debt servicing and allocate the external debt to increase the technical skill and professional capabilities of the people. It can be achieved with the better professional and skilled negotiation with the donor agencies and countries. So that they might be able to increase the manufacturing sector growth rate of the economy.