Pakistan's Escalating Debt Imbroglio: A Closer Look

Pakistan grapples with escalating external debt, totaling USD 130.85 billion in 2023, with China as the largest creditor and Saudi Arabia second. Debt servicing poses significant fiscal challenges, consuming 43% of exports. The government faces hurdles in implementing the IMF program amid daunting repayment obligations.

Pakistan's external debt situation has intensified, as highlighted by the World Bank's latest International Debt Report 2024. The report indicates that Pakistan's total external debt reached USD 130.85 billion in 2023, representing 352% of its total exports and 39% of its gross national income (GNI).

China remains Pakistan's largest bilateral creditor, holding a 22% share of the nation's total external debt, while Saudi Arabia follows with a 7% share. The country's fiscal position is threatened by high debt-to-export and debt-to-revenue ratios, signifying a weakening economic state.

Government officials acknowledge the difficulties in managing the IMF program, crucial for stabilizing the economy, amid challenges of servicing a daunting debt of USD 100 billion over the next four years, excluding potential liabilities and financing current account deficits.

(With inputs from agencies.)