Pakistan and the IMF have a long history together, and Pakistan can thrive without it. Pakistan joined the IMF right after its independence.
Pakistan’s economy is dependent on agriculture, but factors like global warming, climate change, and changing seasons have primarily affected the country’s GDP.
Pakistan is not a big industrial country. The government is one of the world’s developing countries, which is surviving half on its agriculture and loans from the IMF, China, and other Arab countries.
How much does Pakistan have to pay IMF?
Pakistan has been taking loans from the IMF since 1958. The country went to the IMF 23 times to take loans. Today, the outstanding loans in Pakistan are about 5194 million dollars. Pakistan’s standing was at about 70 billion rupees before PTI came into power. Every Pakistani was indebted to IMF for 1,44,000 rupees till 2018, but that increased to 2,35,000 in April, 2022.
The PTI leader and former prime minister of Pakistan, Imran Khan, took the loan amount to double to about 1.4 trillion rupees in just three and a half years. The domestic and external loans have increased by about 80 to 90 percent in each sector, making them about double the previous whole debt.
Miftah Ismail, the current finance minister of Pakistan, has asked the IMF to pay two billion dollars instead of loans. Still, the IMF has given Pakistan a list of commitments that need to be fulfilled before they give Pakistan the loan of one billion dollars. Pakistan is soon going to receive a loan from the IMF.
Loan of China and other countries to Pakistan:
Other than the IMF, Pakistan has been taking loans from China and other Arab countries, including Saudi Arabia. About 80 per cent of the total debt in Pakistan is imported from China.
Pakistan is standing at the back with a deficit of 60 trillion rupees. An estimated 6.7 billion USD is pending as a loan from China to Pakistan.
Pakistan’s Economical Survey (2021-22) gives a glimpse of just how deeply it is indebted to China. It has a current debt of 87.7 billion USD. A major portion of this debt is in the form of investment in the form of development of infrastructural setups like CPEC, motorways, and Gawadar Port and City etc.
Is Pakistan going to default?
Pakistan has taken a lot of loans from many countries, but still, the reserves of the state bank of Pakistan and GDP do not show that it will ever default. Pakistan has to cut its expenditures to get back on track with economic growth.
The institution which lends money to a person or a sovereign state has the authority to declare that country as a defaulter. All the reserves are taken away, and the government is recorded as having a high inflation rate. But, in most cases, these institutions do not declare sovereign states as defaulters; instead, they make arrangements with that state to get their money back.
Can Pakistan be debt free?
Pakistan is an essential agro-based country; many of its reserves and exports are based on agriculture. The critical thing that needs to be cut down is the country’s expenditures. We, as a nation, need to focus on ending crises.
Not only has the number of exports been cut down in the last few years, but the supply in our country has also been shortened, which has caused the massive hike in food prices in recent years. Pakistan is trying its best to improve the national reserves by putting extra taxes on the rich and poor people.
The salaried class is also being taxed, and one central act is that NAB has also been taxed. Prices of diesel and petro have tremendously increased. Furthermore, power tariffs and fuel price adjustments are also being imposed on the nation.
Some good initiatives must be taken in the agriculture and industrial sectors to make this country’s debt manageable. This will provide youth with employment. Oversees need to be investing in Pakistan so we may make our economy better.
Why is Pakistan in debt?
The IMF is one of the sub-agencies of the United Nations. Pakistan became a member of the UN and joined the IMF in 1995. A government takes up the loan to make the country work smoothly, adjust the expenditures, and invest in the country’s development.
Pakistan took its first loan in 1958, after which that money was put into the country’s development. Pakistan’s relations with China resulted in the development of Pakistan in the form of CPEC. Pakistan is in debt to China largely because of CPEC.
From Saudia Arabia and other Islamic countries, Pakistan took debt because sometimes it is IMF policy to clear IMF bailout. In this fiscal year of 2022–2023, the IMF asked Pakistan to take the amount from Saudia or China to make an IMF bailout, after which it will release 1 billion dollars as a loan.
