Pakistan’s Debt Reaches Record High Amid Economic Challenges
As of October 9, Pakistan’s government debt has reached an unprecedented PKR 70.36 trillion, raising concerns about the country’s economic stability. In the first two months of the current fiscal year, federal debt increased by PKR 1,448 billion, with PKR 739 billion added in August alone, according to the State Bank of Pakistan. Between September 2023 and August 2024, the federal government’s debt rose by PKR 6,392 billion. Domestic debt accounted for PKR 48,339 billion, while external debt stood at PKR 22,023 billion.
This significant rise in borrowing has sparked worries about Pakistan’s fiscal health and debt sustainability. Recently, the International Monetary Fund (IMF) approved a USD 7 billion bailout package for Pakistan, releasing the first loan tranche of less than USD 1.1 billion to help the country address its economic crisis. This marks Pakistan’s 25th IMF program since its independence in 1947, the highest number for any country.
Last year, Pakistan faced the risk of default due to economic shrinkage amid political chaos, catastrophic monsoon floods, and a global economic downturn. The government was saved by last-minute loans from friendly countries and an IMF rescue package. However, the country’s finances remain strained with high inflation and significant public debts. The Pakistan Prime Minister emphasized in July that this IMF program should be the last.
Doubts Revealed
Pakistan -: Pakistan is a country in South Asia, neighboring India. It has its own government and economy.
Debt -: Debt is the money that a country or person owes to others. It needs to be paid back over time.
PKR -: PKR stands for Pakistani Rupee, which is the currency used in Pakistan.
Trillion -: A trillion is a very large number, equal to 1,000 billion. It’s used to measure big amounts of money.
IMF -: IMF stands for International Monetary Fund. It’s an organization that helps countries with financial problems by giving them loans.
Bailout -: A bailout is financial help given to a country or company to prevent it from failing.
Fiscal Year -: A fiscal year is a 12-month period used by governments and businesses for accounting purposes. It may not start in January.
Inflation -: Inflation is when the prices of goods and services go up, making things more expensive over time.
Default -: Default is when a country or person cannot pay back the money they owe.