KARACHI: In Pakistan, the amount of loans increases every year as the government obtains new loans for repayment of existing loans and interest. “We have almost accumulated $141 billion in foreign debt; it is quite a disappointing situation,” said Ateeq ur Rahman, economic and financial analyst.
United Nations Secretary General Antonio Guterres during his recent visit to Pakistan was kind enough to mention that developing countries like Pakistan are facing difficult financial conditions and there are “default” risks. in some cases, it is therefore essential to develop a new mechanism by International Creditors for reimbursement.
Showing concern over the devastating floods that have hit Pakistan, he also said: ‘I have seen many humanitarian disasters around the world, but I have never seen climate carnage of such magnitude’ – the worst damage in southern Pakistan.
He advocated “debt swapping,” in which countries, instead of paying creditors, should use that money to invest in sustainable infrastructure. This is (exactly) what Pakistan needs instead of paying its debt by using this money for infrastructure rehabilitation and reconstruction, but the lack of credibility is a big obstacle.
He added that Pakistan has suffered a huge $30 billion loss from floods and disasters which means an amount to be paid on external debt and another $30 billion has been accrued for the resilience of the economy.
Additionally, we need more than $22 billion being the requirement to balance our “books of accounts” even without paying a single penny on existing liabilities, making economic conditions more precarious. Due to the alarming situation, there is no chance to borrow more, let’s depend on our own sources, Ateeq said.
Copyright Business Recorder, 2022