IMF lifeline and debt dilemma

Pakistan’s economy has long been in the grips of financial instability, characterised by a rising debt burden and frequent recourse to external financing. The recent statement by Finance Minister Muhammad Aurangzeb underscores the urgency of the situation, as he highlighted the anticipated rollover of loans from friendly countries and ongoing negotiations with the International Monetary Fund (IMF) for a new Extended Fund Facility (EFF). This situation raises critical questions about Pakistan’s financial future and the sustainability of its economic policies. The reliance on short-term loans and debt rollovers from countries like China, Saudi Arabia, and the United Arab Emirates has become a recurring theme in Pakistan’s economic narrative. These rollovers provide temporary relief but do not address the underlying structural weaknesses in the economy. The frequent need for such financial support reflects the country’s inability to generate sufficient domestic revenue or attract sustainable foreign investment.