- Pakistan does not even have money to pay China’s debt, on the verge of default
- Imran government took a loan of more than 6 lakh 82 thousand crores during the tenure of three years.
- The domestic and foreign debt on Pakistan has exceeded 50 thousand billion rupees.
Pakistan’s Prime Minister Imran Khan has plunged the country into debt during his tenure. The situation has become so bad that Pakistan does not even have money to pay off China’s debt. Apart from China, Pakistan has also taken a huge amount of debt from United Arab Emirates (UAE), Saudi Arabia, World Bank, International Monetary Fund (IMF). The domestic and foreign debt on Pakistan has exceeded 50 thousand billion rupees. A year ago, every Pakistani had a debt of about 75 thousand rupees.
China’s debt is sinking to Pakistan
China’s debt is further straining the economic condition of Pakistan, which is already in the trough. At the end of this financial year, the total external debt on Pakistan will cross US $ 14 billion. About half of this debt is from commercial banks in China. Pakistan has mainly taken loans from these banks for projects related to the Belt and Road Initiative (BRI).
IMF and Finch warn on Pakistan’s debt
In April this year itself, the International Monetary Fund warned that Pakistan’s public debt stability was continuing to weaken due to policy failures and rising contingency debt. In May, the international rating agency Finch gave Pakistan a B rating. Finch had said that this rating has been given after looking at Pakistan’s weak public finances, weaknesses in external finances and failure of the government.
World Bank compares Pakistan with Sri Lanka
In the World Bank’s Debt Report 2021, Pakistan was rated much worse than India and Bangladesh. It was said in the report that Pakistan is now seen going at par with Sri Lanka in terms of debt. In this report the debts of South Asian countries were analyzed. China has also captured the Hambantota port by trapping Sri Lanka in its debt trap. Not only this, the influence of China is also being seen on Sri Lanka’s foreign policy.
So will Pakistan be declared a defaulter?
Pakistan has never been declared a defaulter in repaying the loan. Islamabad-based Pakistani political scientist, economist and financial analyst Farooq Saleem, in a conversation with Asia Times, said that Pakistan has never defaulted on repayment of international debt. Declaration of defaulter is always made by the lending agencies. The institution which lends you money is legally entitled to declare you a defaulter. Usually, they do not declare a sovereign state as a defaulter as doing so increases the risk of losing money lent as debt.
Debt of these countries and institutions on Pakistan
Pakistan’s exchequer is already under pressure to repay $2.6 billion in debt from several countries, $9.1 billion in Chinese government and commercial banks’ debt, $1 billion in Eurobonds/Sukuk and $1 billion from the IMF. Pakistan owes the Paris Club $33.1 billion in multilateral debt, $12 billion in international bonds such as Eurobond and Sukuk. Apart from this, Pakistan has also secured safe deposits of $3 billion each from the United Arab Emirates and China. At the same time, another tranche of $ 3 billion is going to meet Saudi Arabia.
Information about the total debt given in the Parliament from Pakistan
Pakistan’s Finance Ministry informed Parliament on Friday that during the past three years, Pakistan’s debt has increased by 16 trillion rupees ($91 billion). Data released by the finance and planning ministries showed that Pakistan’s total debt stood at 25 trillion ($142 billion) in June 2018, rising to 41 trillion ($233 billion) by August 2021.
$42.4 billion repaid in debt interest
Pakistan’s Senate was told on Friday that the internal debt increased from 16 trillion rupees ($91 billion) to 26 trillion dollars ($148 million) during this period. Similarly, foreign debt increased from 8.5 trillion rupees ($48.3 billion) to 14.5 trillion rupees ($83 billion) in the same period. The government has paid 7.46 trillion ($42.4 billion) as interest on these loans.