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Mon. May 27, 2024
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Pakistan’s Undying Debt
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The complex problem of Pakistan's debt has been brought on by a number of factors. Political instability, poor economic management, and outside variables like natural disasters and the state of the world's economy are a few of these issues. Although the government has put regulations in place to address these concerns, development has been slow. Pakistan has endured numerous difficulties throughout its history, such as political unrest, economic hardships, and environmental difficulties. However, the nation has also achieved tremendous strides in fields like infrastructure improvement, healthcare, and education. Despite these improvements, Pakistan still has a lot of problems, such as adoption, poverty, and security threats.

Pakistan's political position with relation to debt is also complicated and varied. While it's critical that the nation deal with its debt problem, it's also crucial to make sure that any steps taken to lessen debt are sustainable and don't disproportionately affect society's most vulnerable citizens. In the upcoming years, Pakistan's authorities will face a significant task in striking a balance between these competing agendas.

Pakistan has both local and foreign security risks in addition to its economic difficulties. In addition to a focus on tackling the sources of extremism and terrorism, combating these challenges will necessitate a comprehensive strategy that combines both military and non-military actions.

The USIP report called the USD 77.5 billion that Pakistan needs to repay in external debt from April 2023 to June 2026 a "hefty amount" for a USD 350 billion economy. As of October 2021, the total public debt and liabilities of Pakistan is estimated to be about Rs. 63.279 trillion / US$140 billion which is 89 percent of gross domestic product (GDP) of Pakistan

If a country defaults on its external debt, it can lead to several consequences. The country’s credit rating will be downgraded, making it more difficult and expensive to borrow money in the future. The country’s currency may also lose value, which can lead to inflation and higher prices for imported goods. In addition, the country may face legal action from its creditors, which can result in the seizure of assets or other penalties.

Pakistan's bonds fell to just half their face value after the Financial Times reported that a UN development agency was pleading with the cash-strapped nation to restructure its debt.

"Given the climate-induced disaster in Pakistan, we are seeking debt relief from bilateral Paris Club creditors," Finance Minister Miftah Ismail said in a Tweet. "We are neither seeking, nor do we need, any relief from commercial banks or Eurobond creditors."

In March and April, the Pakistani government established distribution points all over the nation to give citizens sasta aur muft aata (cheap and free flour) to lessen their burden in the face of rising costs and the nation's continuous economic crisis. However, the campaign generated difficulty rather than good in a number of locations when stampedes started, killing and wounding people. Pakistan’s citizens are putting their lives at risk for something this basic.

Now, Pakistan is close to default. Many people are leaving Pakistan in search of employment in abroad, with a number of them who hold good paying jobs prefering to have less paying jobs abroad. According to 2019 data, more Pakistanis have migrated from Pakistan in the last 9 years than in 30 years.

It would appear that the public has given up on Pakistan. Its situation is just not changing. Every year Pakistan falls into more debt. Every Pakistani man or woman owes Rs57,000 each, which is more than half of an average middle class person’s yearly wage. With the current situation of tax emission, corruption, and political conflicts, people are focusing on domestic conflicts rather than international conflicts or policies to tackle them.

Pakistan is depending on debt relief or loans from his neighboring countries and paying  previous loans. Its infrastructure has been destroyed from the inside. Many internal conflicts are not letting Pakistan move forward.

Moreover, Pakistan’s currency has been depleting immensely in the past few years. Currently,  one dollar is equal to 285.30 rupees. The stock market flows in dollars and this devalues the rupee. It causes inflation and on top of the immense debt, people cannot afford their regular lifestyle. It causes economy to decrease, and this cycle eventually effects Pakistan and its already bad situation.

There’s a cycle flow which, at the, end puts Pakistan in a more miserable state. The dollar keeps on rising and inflation keeps on increases, which turns the public against their government, and then the public starts focusing on internal conflicts. Many times, they forget  that just one person is not responsible for inflation. But then again, the corrupt have found a loophole in this cycle and they are using it to their advantage. It’s like Pakistan has gone back to its initial years when everything was so difficult to manage in the country. The only difference is that this condition is for the poor. The rich are getting richer.

We cannot get out of this situation if required measures are not be taken. We have to make our own decisions without any sort of pressure from any side. This country has become a circus. It is unorganized, and it has been in this state for so many years that we have forgotten our origins. Note, this unorganized state has become our normal state. We don’t think to change it and bring it back the time when Pakistan was considered the next emerging power. We just keep on living in this state, in this circus with thousands of rupees on our heads and struggling to survive every day.

Pakistan is standing and still a great country, although its crumbling from the inside but from outside. Despite all the challenges being faced, progress has been made in healthcare departments and infrastructure development. With proper policies, investments, and checks and balances, we can stabilize the economy and become prosperous. However, this kind of change requires consistency and determination with which we do not have a good relationship to start from.

Minahil Javaid is a student of Economics at the National Defense University in Pakistan. Her areas of interest are developmental economics and economics growth.

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