Pakistan’s debt dependence

Caretaker Finance Minister Shamshad Akhtar stated the obvious when she stressed that Pakistan will remain dependent on the International Monetary Fund (IMF) for some time. Still, it is better than empty promises of never going to the IMF again, though those sweet nothings are expected from those who wish to be elected rather than the caretaker setup. Pakistan’s debt has climbed alarmingly in the last fiscal year. While the pandemic did the country no favours, the Russia-Ukraine conflict made the already fragile global economy more precarious through energy price shocks. Domestic political instability delayed the tough decisions that could have slowed the downward slide. To borrow to service debt and pay off loans is to paddle in a sinking boat. And Pakistan’s economy has more holes than Swiss cheese. But Pakistan is not the only one drowning. At $235tr, total debt stood at 238pc of global GDP last year, nine percentage points higher than in 2019, according to the IMF.