Pakistan’s Debt Crisis: Every Citizen Owes PKR 295,000
The average debt per Pakistani citizen has reached PKR 295,000, with the country’s total debt rising to PKR 71.24 trillion in 2024. This increase is due to successive governments relying on loans from international lenders.
Debt Breakdown
The domestic debt within Pakistan has increased by PKR 8.350 trillion, reaching a total of PKR 47.160 trillion. On the other hand, Pakistan’s external debt now stands at PKR 33.062 trillion. Out of that, the net government external debt has reached PKR 21.75 trillion.
IMF Debt
The debt owed by Pakistan to the International Monetary Fund (IMF) has increased by PKR 292 billion, bringing the total IMF debt to PKR 2.33 trillion.
Domestic Debt Composition
The largest portion of Pakistan’s domestic debt is attributed to federal government bonds, which amount to PKR 32.8 trillion. This includes Pakistan Investment Bonds (PIBs) exceeding PKR 28 trillion, Sukuk bonds totaling PKR 4.77 trillion, and prize bonds contributing PKR 345 billion.
Other Domestic Debts
Pakistan’s foreign currency loans within the domestic debt amount to PKR 374 billion, and the Naya Pakistan Certificates account for PKR 84 billion.
This drastic increase in both domestic and external debt underscores the urgent need for economic reforms and management in Pakistan.
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 someone borrows too much money and can’t pay it back on time.
PKR -: PKR stands for Pakistani Rupee, which is the money used in Pakistan. It’s like how we use Indian Rupees (INR) in India.
295,000 -: This number means that if you divide all the money Pakistan owes by the number of people living there, each person would owe 295,000 Pakistani Rupees.
71.24 trillion -: A trillion is a very big number. It’s 1 followed by 12 zeros. So, 71.24 trillion means 71,240,000,000,000 Pakistani Rupees.
International lenders -: These are organizations or countries that give loans to other countries. Examples include the World Bank and the International Monetary Fund (IMF).
Domestic debt -: This is the money that the country owes to people or institutions within its own borders. It’s like borrowing money from your own family.
External debt -: This is the money that the country owes to people or institutions outside its borders. It’s like borrowing money from a friend who lives in another city.
Federal government bonds -: These are like IOUs that the government gives to people or institutions when it borrows money from them. The government promises to pay back the money with some extra interest.
Economic reforms -: These are changes that a country makes to improve its economy. It can include things like changing laws, reducing spending, or finding new ways to make money.