Pakistan has been facing a significant economic crisis in recent years, with rising external debt and domestic liabilities. The country has turned to the International Monetary Fund (IMF) for financial assistance to address its economic challenges and stabilize its economy.
Pakistan’s external debt problem is a major concern. The country’s external debt has risen significantly over the past decade, with its total external debt reaching over $115 billion in 2021. The external debt burden has been exacerbated by the country’s persistent trade deficit, which has widened over the years due to a lack of competitiveness in its exports and a reliance on imports.
Domestically, Pakistan faces a significant debt burden, with its total public debt surpassing $100 billion in 2021. The country’s public debt-to-GDP ratio has also increased over the years, reaching over 87% in 2021. This has put significant pressure on the government’s budget and limited its ability to invest in much-needed infrastructure and development projects.
To address these challenges, the Pakistani government has implemented a range of measures, including efforts to increase exports and reduce the trade deficit, as well as fiscal austerity measures aimed at reducing the budget deficit. However, these efforts have not been sufficient, and the government has turned to the IMF for a bailout package to provide much-needed financial support and help stabilize the country’s economy.
The IMF program includes a range of policy measures aimed at addressing Pakistan’s macroeconomic imbalances and improving its economic prospects. These measures include fiscal consolidation, structural reforms to improve the business environment and attract foreign investment, and measures to strengthen the country’s financial sector and improve governance.
Overall, addressing Pakistan’s external debt problem and domestic liabilities will require a comprehensive approach that includes both short-term measures to stabilize the economy and longer-term structural reforms to improve the country’s competitiveness and attract investment. The IMF program provides a framework for addressing these challenges, but sustained political commitment and implementation will be essential for success.