Pakistan’s Financial Struggles: 74% of Urban Population Can’t Meet Monthly Expenses
Islamabad, Pakistan – A recent study by Pulse Consultant reveals that 74% of Pakistan’s urban population is struggling to meet their monthly expenses. This is a significant increase from May 2023, when 60% of households reported financial difficulties.
According to the study, 60% of those struggling have cut back on essential expenses like groceries, while 40% have borrowed money from friends or family. Additionally, 10% have taken on part-time jobs to supplement their income. The survey, conducted between July and August, included over 1,110 respondents from Pakistan’s 11 largest cities, aged 18 to 55.
Pakistan’s national debt is projected to increase by 170.3 billion US dollars between 2024 and 2029, reaching a peak of 446.61 billion US dollars. The country has been facing a high fiscal deficit, averaging 7.3% of economic output over the past five years, leading to a national debt of PKR 78.9 trillion. This includes domestic debt of PKR 43.4 trillion and external loans of PKR 32.9 trillion.
The Mid-Year Budget Review Report from the finance ministry highlights a 64% increase in debt payments, reaching PKR 4.2 trillion in the first six months up to December. This surge is due to the rising debt stock and record-high interest rates of 22%, which have halted spending on development initiatives.
Recently, Pakistan’s Finance Minister Muhammad Aurangzeb met with his Chinese counterpart to seek relief from power sector debts. The ministers requested an eight-year extension for repaying energy debt, converting US dollar-based interest payments to Chinese currency, and reducing interest rates for Chinese-funded projects. These measures aim to lower energy costs and secure IMF approval for a USD 7 billion bailout package.
Pakistan has secured a staff-level agreement with the IMF for a 37-month Extended Fund Arrangement (EFF) worth about USD 7 billion. This agreement is subject to approval by the IMF’s Executive Board and confirmation of necessary financing assurances from Pakistan’s development and bilateral partners.
Doubts Revealed
Urban Population -: Urban population refers to people living in cities and towns, as opposed to rural areas which are villages and countryside.
Monthly Expenses -: Monthly expenses are the costs that people have to pay every month, like rent, food, and electricity bills.
National Debt -: National debt is the total amount of money that a country owes to lenders, which can include other countries, banks, or international organizations.
Fiscal Deficit -: A fiscal deficit happens when a country spends more money than it earns from taxes and other revenues.
Debt Payments -: Debt payments are the money that a country has to pay back to its lenders, including interest.
Finance Minister -: The Finance Minister is a government official responsible for managing a country’s money, including its budget and economic policies.
IMF -: IMF stands for International Monetary Fund, an organization that helps countries with financial problems by giving them loans and advice.
Bailout Package -: A bailout package is financial help given to a country or company to prevent it from failing, usually in the form of loans or grants.