Pakistan’s Debt Crisis: Government Borrows PKR 537 Billion in July
In July, Pakistan’s internal debt increased by PKR 537 billion, reflecting a significant rise in state expenditure. By the end of July, the country’s total debt had reached PKR 69 trillion, up from PKR 68.914 trillion in June.
In 2024, the government borrowed a record PKR 8.4 trillion from domestic banks at an unprecedented interest rate of 22%. This heavy borrowing and high taxation are negatively impacting economic growth and employment.
The PMLN-led government is struggling to meet external debt repayments and is heavily taxing domestic stakeholders. This aggressive borrowing policy is squeezing fiscal space for the private sector and reducing business activities.
Doubts Revealed
Pakistan -: Pakistan is a country in South Asia, located next to India. It has a population of over 220 million people.
Debt Crisis -: A debt crisis happens when a country owes a lot of money and has trouble paying it back. This can cause economic problems.
PKR -: PKR stands for Pakistani Rupee, which is the currency used in Pakistan. It’s like how we use Indian Rupees (INR) in India.
Internal Debt -: Internal debt is the money that the government borrows from within its own country, like from its own banks and people.
State Expenditure -: State expenditure means the money that the government spends on things like schools, roads, and hospitals.
Trillion -: A trillion is a very big number. It is 1 followed by 12 zeros (1,000,000,000,000).
Domestic Banks -: Domestic banks are banks that operate within the country. In this case, it means banks in Pakistan.
Interest Rate -: An interest rate is the extra money you have to pay back when you borrow money. For example, if you borrow 100 rupees at a 22% interest rate, you have to pay back 122 rupees.
Economic Growth -: Economic growth means the increase in the amount of goods and services produced by a country. It usually means more jobs and better living conditions.
Employment -: Employment means having a job. When more people have jobs, it is good for the economy.
PMLN -: PMLN stands for Pakistan Muslim League (Nawaz), which is a political party in Pakistan. They are currently leading the government.
External Debt Repayments -: External debt repayments are the money that a country has to pay back to other countries or international organizations from which it has borrowed money.
Taxing Domestic Stakeholders -: Taxing domestic stakeholders means the government is collecting more taxes from its own people and businesses to raise money.