Pakistan’s Foreign Debt Will Soon Cross a Staggering $75 Billion
2 weeks ago
Pakistan’s loan situation has steadily grown worse over the course of the last year as government has continued to take on more loans from local and foreign institutions. While taking loans is not unique to this government, the rate at which the loans are accruing is certainly unprecedented.
Pakistan’s Current Debt
2016 was a record setter in terms of debt for our country. Pakistan’s foreign debt stood at $72.98 billion (Rs. 7.40 trillion ) after the first half of 2016. During the last fiscal year, Pakistan’s debt increased by $7.9 billion, a record amount of foreign debt.
During the past three-odd years, the current government has taken $25 billion in foreign loans. Out of the $25 billion, $11.95 billion was used to pay off other loans.
For the same duration, the PML-N government has borrowed PKR 3.1 trillion ($30 billion) from local banking institutions in rupees. (This is local debt and does not add up in the foreign debt mentioned above.)
Summing up, Pakistan’s total debt (local and foreign) had increased by $55 billion in the three-odd years of the current govt. Loans from the Chinese institutions are separate thing altogether and more details regarding those are still incoming.
We would like to mention that domestic borrowings are often not mentioned because their affect is not as adverse as foreign debt. The government could simply devalue local currency and make up for local payments.
According to data from the Trading Economics, Pakistan’s external debt will cross $75.54 billion (PKR 7.90 trillion) when the details for Jan 2017 come out.
It is expected to cross $79.35 billion (PKR 8.30 trillion) in 6 months’ time and at the rate it is progressing, the analyst firm says by 2020 the foreign debt will reach $87.1 billion (PKR 9.12 trillion).
Pakistan’s Debt Due in 18 Months
Pakistan has to pay $11.5 billion within the next 18 months. Various international monetary institutions are owed different amounts from that sum. These are:
- Pakistan has to pay a sum of $8.76 billion to International Monetary Fund (IMF), World Bank and Asian Development Bank.
- $160 million has to be paid in Saudi Riyals to Islamic Development Bank.
- Pakistan has to pay $1.6 billion to China within 18 months.
- Japan has to be paid back 192 billion Yen.
- Paris Club from France is owed 625 million Euros.
Let’s take a look at Pakistan’s debt history:
- Pakistan had received $121 million from 1951 to 1955.
- The figure nearly had tripled in the next five years.
- By December 1969, the external debt of Pakistan had amounted to $2.7 billion.
- Pakistan’s total external debt was $3 billion by December 1971.
- Foreign debt figure had then subsequently increased to $6.3 billion in 1977.
- Pakistan’s external debt was $21.9 billion in 1990.
- It was $35.6 billion in 2000.
- Pakistan’s foreign debt and liabilities in July 2013 stood at USD 61.9 billion
- In July 2014, Pakistan’s foreign debt soared to USD 63.4 billion, showing an increase of USD 1.5 billion.
- In July 2015, the foreign debt rose to USD 65.1 billion recording an increase of USD 1.7 billion.
With updated information about Pakistan’s debt, some often used facts need to be updated.
- With a foreign debt of $74 billion and a population of 190 million. Each Pakistani owes more foreign debt than they earn every month. (The amount is higher when considering local debt.)
- When the debt is converted to $1 notes, it can be wrapped around the world 284 times (293 times with $79 billion).