The second-largest party in Pakistan, the Pakistan People's Party (PPP), has thrown its support behind the country's largest political organization, the Pakistan Muslim League-Nawaz (PML-N), in their efforts to form a majority coalition. Recent legislative actions have increased this administration's authority over economic affairs and electoral oversight.
Although there has been some improvement, Pakistan's economy is still in unstable shape, with foreign exchange reserves of only $8 billion, barely sufficient to cover basic imports for two months. But a $1 billion bond payment is due soon, and the IMF is also going to pump in $700 million. This could further deplete reserves, which is why former deputy governor of the central bank Murtaza Syed has called for an immediate IMF initiative because of the unstable reserve levels.
Pakistan has the highest debt-to-GDP ratio among major global economies, with projections indicating that interest payments will consume between 50% and 60% of government revenues this year. The ratio has surpassed 70%. The core of Pakistan's debt problem, according to eminent analyst firm Tellimer, is its domestic debt, which accounts for about 60% of the country's total debt stock and 85% of its interest burden. In addition, the bulk of Pakistan's external debt, which is expressed in US dollars, is owed to bilateral and multilateral creditors and makes up about 85% of the total debt.
https://economictimes.indiatimes.com/news/international/business/how-bad-is-pakistans-debt-crisis-and-can-the-imf-save-it/articleshow/107692424.cms.
2 comments:
Pakistans low foreign exchange reserves and high debt lead to a huge risk of default the political instability for the past 2 years hasnt helped either and the high taxes and depreciated currency discourage companies from investing in short things are not looking good for pakistans economy
I know many other countries like the US also have very high national debt and frequently operate in a deficit, however 70%% of government revenue going towards interest payments is an alarming figure. I don't know how Pakistan will be able to recover from this but maybe a majority coalition could be a good start as it could lead to quicker decision making within the government.
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