Better economic model needed

Pakistan’s overall external debt and liabilities stood around $126.35 billion at the end of December 2022 against our annual exports of goods and services worth $40bn in FY23 that ended in June this year. Since the external debt and liabilities are more than three times our total exports, we are, by textbook definition, a heavily indebted nation. Large external debts and liabilities cannot be reduced unless the economy begins to grow at a constant rate of six per cent plus and foreign exchange earnings of exports and remittances exceed total imports — and Pakistan begins to attract foreign investment of no less than $5-$6bn per year. That is not possible anytime before FY26 starting in July 2025. So what can be done between now and June 2025 — in a little over two years? In the next two fiscal years, the country’s external sector will remain under pressure due to heavy external debt financing and economic growth is expected to remain in the range of 3-4pc (recovering from an estimated 0.4-0.6pc this year).