Pakistan debt unsustainable, headed towards inevitable default, says report
Tabadlab, a think tank based in Islamabad, presents a grim outlook on Pakistan's economic condition, characterizing its debt situation as an «intense blaze» and significantly more severe than the International Monetary Fund's evaluation of being «close to» manageable.
With debt levels reaching alarming highs, Pakistan faces the grim prospect of an «inevitable default,» which could trigger a devastating economic spiral.
Driving the news
Amidst growing worries about Pakistan's ability to sustain its debt, there's a backdrop of economic gloom among voters, as indicated by a recent Gallup poll and a contentious election.
This uncertainty has already had a detrimental effect on the country's stock market. Shehbaz Sharif, a potential candidate for prime minister, has stressed the immediate need for a new IMF bailout to prevent a crisis.
How the debt has grown over the years
- Pakistan's per capita debt increased by 36% from $823 in 2011 to $1,122 in 2023.
- During the same timeframe, Pakistan's GDP per capita saw a 6% decline from $1,295 in 2011 to $1,223 in 2023.
- The disparity between the growth rates of debt and income in Pakistan indicates a widening financing gap, leading to the need for additional borrowing.
- A comparative illustration shows that a newborn in 2011 inherited a debt of PKR 70,778, while a newborn in 2023 bears a debt of PKR 321,341, marking a 4.5 times increase.
Why it matters
- Since 2011, Pakistan's external debt has nearly doubled,
