Pakistan Faces $100 Billion Debt Crisis
Deputy Finance Minister Ali Pervaiz Malik’s Revelation
Pakistan’s Deputy Finance Minister Ali Pervaiz Malik announced that the country will need to repay $100 billion in external debt over the next four years. This amount is significantly higher than the current $9.4 billion in foreign exchange reserves.
Financial Challenges Ahead
Finance Minister Muhammad Aurangzeb disclosed that despite a new $7 billion program from the International Monetary Fund (IMF), Pakistan will still face a $5 billion financing gap between 2024 and 2026. The country plans to manage this debt through rollovers and restructuring.
Debt Breakdown
According to the Director General of Debt, Mohsin Chandna, Pakistan’s external debt for the fiscal year 2024-25 amounts to $18.8 billion, excluding central bank liabilities. The country aims to secure rollovers totaling $100 billion, including loans from Saudi Arabia ($5 billion), China ($4 billion), UAE ($3 billion), and Kuwait ($700 million).
Uncertain Future
The current financial scenario and statements from officials highlight that Pakistan lacks a concrete plan for repaying these loans. The only viable option appears to be requesting international lenders to restructure their loans for another year.
Doubts Revealed
Debt Crisis -: A debt crisis happens when a country owes a lot of money and has trouble paying it back. It’s like when you borrow too much money and can’t pay it back on time.
Deputy Finance Minister -: A Deputy Finance Minister is a government official who helps manage a country’s money and finances. They work under the main Finance Minister.
External Debt -: External debt is the money a country owes to other countries or international organizations. It’s like borrowing money from a friend who lives far away.
Foreign Exchange Reserves -: Foreign exchange reserves are the money a country keeps in foreign currencies. It’s like having savings in different types of money, like dollars or euros.
IMF -: IMF stands for International Monetary Fund. It’s an organization that helps countries with financial problems by giving them loans and advice.
Rollover -: A rollover is when a country extends the time it has to pay back a loan. It’s like asking for more time to return borrowed money.
Restructuring -: Restructuring is when a country changes the terms of its loans to make them easier to pay back. It’s like changing the rules of a game to make it fairer.
Saudi Arabia, China, UAE, Kuwait -: These are countries that are lending money to Pakistan. Saudi Arabia, China, UAE (United Arab Emirates), and Kuwait are all countries in Asia.