CSSPakistan Affairs

Q.6 What is the volume of grants, aid, and loans in Pakistan’s economy in the last ten years to stimulate growth? Discuss. 2022

The volume of grants, aid, and loans in Pakistan’s economy in the last ten years has been significant, as the country has sought to stimulate growth and address various economic challenges. Here is a brief overview of the major sources and amounts of external financing that Pakistan has received in recent years:

  1. International Monetary Fund (IMF): Pakistan has received several loans from the IMF over the past decade to support its economic stabilization and reform efforts. The most recent loan, approved in 2019, was for $6 billion, spread over three years.
  2. World Bank: The World Bank has provided significant financing to Pakistan in recent years, including loans for energy sector reforms, social safety nets, and disaster recovery. In 2020, the World Bank approved a $450 million loan for Pakistan to support its COVID-19 response.
  3. Asian Development Bank (ADB): The ADB has also provided significant financing to Pakistan, including loans for energy sector reforms, transport infrastructure, and urban development. In 2021, the ADB approved a $300 million loan to support Pakistan’s post-COVID-19 recovery.
  4. China: China has emerged as a major source of financing for Pakistan in recent years, particularly through the China-Pakistan Economic Corridor (CPEC) initiative. Under CPEC, China has pledged to invest billions of dollars in infrastructure projects in Pakistan, including highways, ports, and power plants.
  5. Other donors: Pakistan has also received grants and loans from other bilateral and multilateral donors, including the United States, the United Kingdom, the European Union, and the Islamic Development Bank.

Overall, the volume of grants, aid, and loans in Pakistan’s economy over the past decade has been significant, with total external financing averaging around $8-10 billion per year. While this financing has helped Pakistan address some of its economic challenges, such as a balance of payments crisis and energy shortages, it has also contributed to a growing debt burden and concerns about the country’s ability to repay its loans. Going forward, Pakistan will need to strike a balance between leveraging external financing to support its economic development and ensuring that it can manage its debt sustainability and avoid future financial crises.

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