Islamabad, Feb 7: Terming them as “superficial” and “far from reality”, Pakistan Tehreek-e-Insaf (PTI) leader Shaukat Yousafzai has rejected claims made by the federal government led by Prime Minister Shehbaz Sharif about the country sailing smoothly towards economic stability.
Yousafzai accused the government of misleading the public with false claims about economic recovery, stating that Pakistan is running on loans with the total national debt having swollen to at least 27 trillion rupees within two years and another $1 billion loan on the horizon.
“Is this country going to be run entirely on loans?” questioned Yousafzai, a former Khyber Pakhtunkhwa minister and senior leader of the party founded by incarcerated former Pakistan Prime Minister Imran Khan. The PTI leader’s statement comes at a time when reports have revealed that at least 92 per cent of the country’s external debts are owed by three major sources with China on top of the list.
“Around 92 per cent of Pakistan’s external debt is owed by three major sources including multilateral and bilateral creditors as well as through international bonds. Among the bilateral creditors, China is on the top keeping in view the total external debt and liabilities,” stated economist Mehtab Haider.
However, American credit rating agency Fitch has expressed some optimism over the outlook of Pakistan’s economic progress in financial year 2025, forecasting at least 3.0 per cent GDP growth. Fitch has stated that Pakistan’s efforts to absorb tighter policy through tough decisions have given it a leverage to benefit from low interest rates, adding that the private sector credit growth rate turned positive for the first time since June 2022.
“The disinflation trend, along with exchange rate stability and a tight monetary policy stance, had reduced domestic and external financing needs, bringing relief to the country’s financial situation,” the agency maintained. While indicators show positive growth, many remain sceptical about the increasing external debt and liabilities that continue to swell. As per the available details, Pakistan’s total external debt and liabilities till September 2024 stood at $133 billion while public external debt was $88.578 billion.
Sources in the government reveal that the process of securing approval from the federal cabinet has been underway for a Debt Policy Statement for January 2025 but it has not yet been proposed or tabled in the parliament. The government has also missed the deadline for issuing a debt bulletin report till September 2024 as required under the World Bank (WB) loan condition.
Moreover, the external debt for Pakistan continued to increase during the first quarter of the financial year 2025. As per details, over 56 per cent of Pakistan’s external debt is from multilateral lenders including World Bank (WB), Asian Development Bank (ADB), International Monetary Fund (IMF) and others.
The second largest source of Pakistan external debt is from its bilateral partners, which includes Paris Club, commercial sources, International Bonds and commercial banks. Among the bilateral sources, prominent countries include term deposits from Saudi Arabia with $2 billion and United Arab Emirates (UAE) with $1 billion deposited in the Central Bank. On the other hand, disbursements from multilaterals include $2.2 billion from World Bank (WB), $1.3 billion from Asia Development Bank (ADB) and $345 million from the Asian Infrastructure Investment Bank (AIIB).
IANS