Pakistan is currently facing an unprecedented debt crisis, with rising external debt and a desperate need for further loans to stay afloat. As the country’s finance minister scrambles to secure additional loans or resume the International Monetary Fund’s (IMF) $6.5 billion financial assistance package, the situation on the ground continues to deteriorate. In this opinion piece, we will explore the impact of this crisis on ordinary Pakistanis and how the relentless focus on securing loans has led to food shortages, social unrest, and a deteriorating quality of life.
Pakistan’s total external debt and liabilities stand at a staggering $126.3 billion, with the country required to repay $77.5 billion between April 2023 and June 2026, according to the United States Institute of Peace (USIP). The nation’s finance ministers, both past and present, seem to have made securing loans their sole mission, to the detriment of broader economic policy and planning. This overreliance on debt, coupled with an unfavourable economic climate, has put immense pressure on the South Asian nation and its citizens.
Financial assistance from various sources, including multinational lenders, the Paris Club, and bilateral lenders such as China, has been a lifeline for Pakistan. However, the country’s mounting debt obligations and reliance on short and medium-term repayment loans have created a precarious financial situation. With foreign exchange reserves at around $4 billion – barely enough to cover imports for a month – and the IMF slashing Pakistan’s economic growth projection from 2% to 0.5% for the current financial year, the nation faces a bleak economic outlook.
The debt crisis has far-reaching consequences for ordinary Pakistanis, most notably in the form of food and essential item shortages. Restrictions on imports have led to a severe scarcity of critical goods, resulting in food riots and social unrest, even during the holy month of Ramzan. The slowdown in remittance inflows has further exacerbated the situation, leaving many families without the financial support they desperately need.
As Pakistan’s leaders focus on managing loans and appeasing lenders, the everyday struggles of their citizens remain an afterthought. The nation’s achievements are now measured by the ability to secure further loans, rather than tangible improvements to the lives of its people. This short-sighted approach to economic policy is not only unsustainable but also dangerous for the country’s social fabric.
To address the current crisis and prevent future ones, Pakistan must rethink its economic strategy and move beyond its dependence on loans. This includes implementing comprehensive fiscal and monetary reforms, promoting domestic investment, and fostering sustainable economic growth through the development of key industries. The country’s leadership must prioritize the well-being of its citizens and adopt policies that mitigate the impact of debt on everyday life.