Pakistan’s external debt set to grow to whopping $90b

Published: December 13, 2015
Experts say country desperately needs to increase exports, arrest increase in debt. PHOTO: FILE

Experts say country desperately needs to increase exports, arrest increase in debt. PHOTO: FILE


Pakistan’s external debt is projected to grow to a whopping $90 billion in the next four years and the country will need $20 billion a year just to meet its external financing requirements amid concerns that all constitutional arrangements put in place to manage debt have become ineffective.

The external debt figures compiled by renowned economist and the country’s former finance minister Dr Hafiz Pasha are about $14 billion higher than the projections made by the International Monetary Fund.

Moody’s report: International bonds weaken Pakistan’s debt affordability

Dr Pasha on Saturday shared his doomsday scenario in a National Debt Conference, arranged by the Policy Research Institute of Market Economy (PRIME) – an independent think tank.

Dr Pasha’s projections are based on official data. The $14 billion difference was mainly on account of foreign loans that will fly in to finance China Pakistan Economic Corridor (CPEC) projects. The government is not including CPEC loans in total public debt.

“At the moment, we do not have details about the loans that will be taken under the CPEC,” said Ehtesham Rashid, Director General of the Debt Office at the Ministry of Finance, while responding to these projections.

He said once details are available, the Office may have to re-do the entire debt management strategy.

There is enormous support for the CPEC in Pakistan but this game-changing corridor has financial implications for the country that have to be highlighted for better management of debt, said Dr Pasha. His comments come after State Bank of Pakistan governor Ashraf Wathra in an interview last week said there was a need to divulge more details on the debt and investment portions of CPEC, stressing the need for more transparency on part of the government.

Dr Pasha said by 2018-19 amortisation payments would double to $8.3 billion. The current account deficit – the gap between external payments and receipts – will exponentially widen to 4% of the total size of the economy against this year’s level of just under 1% of GDP, he said.

Pakistan to get another $502m IMF loan

The current account deficit will widen due to import of machinery and plants for CPEC projects, in addition to imported fuel like Liquefied Natural Gas and coal.

As against IMF’s projections of just $8.6 billion requirement, Dr Pasha said that total external financing needs, including bridging the current account deficit and repayment of loans, will alarmingly triple to $20 billion by 2018-19.

“This will push the total external debt to $90 billion by 2018-19, showing a growth of 38% over current volume of the foreign debt of over $65 billion,” said Dr Pasha.

He said Pakistan’s exports would have to improve to at least $36 billion if the alarming increase in debt was to be arrested. The country’s exports currently hover around the $24-billion mark.

Constitutional arrangements

The constitutional arrangements put in place to better manage debt are not effectively working as there is hardly any serious debate in the Council of Common Interests and National Economic Council on the debt issue, said Abdul Wajid Rana, former Secretary Finance. He said the Debt Management Office has become subservient to Secretary Finance and was not autonomous.


Sakib Sherani, former Principal Economic Advisor to Ministry of Finance, said that the government was playing with debt numbers. His comments come after the government’s decision to exclude non-plan loans from public debt.

He said the debt-to-GDP ratio has become irrelevant in case of Pakistan as the country lacks the capacity to repay the debt even at its current 65% level of debt-to-GDP ratio.

Pakistan agrees to slap billions in new taxes

“In case of Pakistan, the debt-to-revenue ratio is more relevant. 350% would be the limit, beyond which it wouldn’t be sustainable. Currently, this ratio stands at an alarming 523%,” said Sherani.

“By 2018-19, the debt-to-revenue ratio will be over 750%,” said Dr Pasha.

In order to ensure transparency, there must be a law requiring government to take parliamentary approval of any deal signed with the foreign governments and lending agencies, said Dr Kaiser Bengali, an economic consultant to government of Balochistan.

Published in The Express Tribune, December 13th, 2015.

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Reader Comments (56)

  • Faisal Ali Ahmed
    Dec 13, 2015 - 4:21AM

    Are we going to be the next Greece? We have a lot less friends than Greece and much more isolated.Recommend

  • indialover
    Dec 13, 2015 - 8:21AM

    Dear Faisal,
    Pakistan already is 2nd Greece.
    As a neighbour, I implore you all to be realistic and start trade with India which will help both countries.
    Else, Pakistan will economically implode from within in next 5 years.
    Hope that doesnt happen.Recommend

  • karachi3
    Dec 13, 2015 - 9:12AM

    The debt problem is serious and real.
    Taxes are paying for about 75% of current expenditure and a country cannot progress with such low tax collection.
    FBR which is tax collection department of the government should be urgently reformed and dead wood in FBR should be removed.The recommendation of the independent Tax Reform Commission should be urgently implimentedRecommend

  • abdullah
    Dec 13, 2015 - 9:29AM

    But when he was himself the finance minister in the last term.he did nothing for the country else than letting people do corruption.Hafeez pasha is not a credible man and is equally corrupt as his party members.Recommend

  • Malik
    Dec 13, 2015 - 9:31AM

    Taxes and privatization are a small part of what needs to be done in order to reduce the debt.

    The major part of the hurdle here is attracting foreign investment that has “breadth” to it.

    Unless, we see americans, britains, italians, japanese and canadians with their money and experience roaming the streets of pakistan like they do in other regional economic hubs, we are just chasing a mirage.

    Pakistan needs to open up its borders with india and aghanistan, and end this game of regional hegemony. Only then the westerners – yes, the same people who made china, what it is today – would be enticed to enter.

    We need a liberal, open-minded pakistan that does not scare the goras from landing.Recommend

  • Smiling Buddha
    Dec 13, 2015 - 9:38AM

    It sounds like everything is depending on the success of CPEC.So much dreams and investment on CPEC I hope nothing will go wrong in this multi billion project. Chinese are well know for their shrewd and cunning character. Best of luck pakistan.Recommend

  • Dec 13, 2015 - 11:07AM

    Excellent job by PMLN! In the years 2016-17 and 2017-18, the bilateral and multilateral debt relief given in 2001 will expire and retirement of those loans will begin. pray that CHAOS does not rule the streets. SalamsRecommend

  • asim
    Dec 13, 2015 - 11:09AM

    Where did all the IMF loans go? Can Dr Pasha Tell us?Recommend

  • Shabbir
    Dec 13, 2015 - 11:56AM

    The last few paragraphs talk about debt to revenue ratio in percentage terms. This is how numbers should be presented. The title and the other paragraphs that talk about nominal numbers like $90 billion etc are meaningless. External debt should be presented as a percentage of GDP or relative to government revenue.

    @Faisal Ali Ahmed:
    We have nukes. No one will allow a nuclear power to fail.Recommend

  • Defence Analyst
    Dec 13, 2015 - 12:02PM

    I still remember those days before elections when Nawaz used to say that if you people voted for PMLN then we will breakdown all begging bowls but now he is fooling us with his fake publicity ads on TV. Recommend

  • observer
    Dec 13, 2015 - 12:03PM

    This is all hogwash. This analysis ignores the fact that $50B of Chinese money is on the way with another $100B to follow in the years to come. All debt will just vanish in no time, thanks to our Chinese all-weather friends.Recommend

  • Sonya
    Dec 13, 2015 - 12:23PM

    This is highly criminal, the debt has taken Pakistan’s freedom away, left no reason for us to celebrate independence, the rulers are taking more and more credit to make more corruption, a movement should have been started to stop and reverse this trend otherwise Pakistan will cease to exist.Recommend

  • Parvez
    Dec 13, 2015 - 12:31PM

    Thank you Mr. Nawaz Sharif / Mr.Dar………destroying Pakistan from the inside as it is difficult to do it from the outside……who are our leaders actually working for ?Recommend

  • ali
    Dec 13, 2015 - 12:38PM

    Thank you Raheel Sharif.Recommend

  • Kamran Dastagir
    Dec 13, 2015 - 12:42PM

    You’ve kept selling your strategic assets and inviting foreign investment into lucrative sectors like Telecom and mobile banking. Nobody comes here without a return. Now see the Foreign Outflows when these investors take back dividends or sell shares.

    This policy of promoting the foreigner and foreign investor over the local investor has had disastrous consequences. Now suffer! Recommend

  • Nawaz
    Dec 13, 2015 - 12:59PM

    Thank you Nawaz Sharif for your gift to the nation. My children and their children will be happy to pay for the debt that you have built up every time you have come to power !Recommend

  • Adnoon Siddiqui
    Dec 13, 2015 - 1:09PM

    The media should focus on positive. Atleast we will have Lahore and Pindi metros. Debts are just a minor issueRecommend

  • Alien1
    Dec 13, 2015 - 1:21PM

    The great game has already started yielding results, once the collapse begins then the big economies will slowly eat pakistan like greece. Recommend

  • Ziaurrehman
    Dec 13, 2015 - 1:54PM

    We need a new party at center… enough of ppp PmlnRecommend

  • Praful R Shah
    Dec 13, 2015 - 2:02PM

    Start selling part of Pakistan? India should by it without Musllims Recommend

  • Dec 13, 2015 - 3:01PM

    Who is responsible for this huge burden on the poor people of Pakistan who have no were to escape or turn eye to. Some of this debt money end up in Dubai Jumierah lake and in Jeddah. No power & water lack of food and precious basic necessity, malnutrition is becoming common in some part of Pakistan. The current government don’t give a damn to these issue because they are getting richer at the cost of common Pakistani. Even the farmer who produce the food are in critical condition because of The IMF loan. Mr Nawaz Sharif is quite happy to take foreign trips as many is he like with out any benefit in return. Recommend

  • rajesh
    Dec 13, 2015 - 3:06PM

    On the way to becoming a failed state…. you can sell half of Pakistan to China or India for hard cash. Without population, ofcourse.Recommend

  • IBN
    Dec 13, 2015 - 3:11PM

    Pakistan’s ruling elite both political and establishment have sold the soul of Pakistan and have arranged their funds and setups in cushy places around the world. They will throw the nation to the wolves in such a subtle manner by increasing debt that the nation will not even realize that they have been totally deceived via democracy as well as dictatorship. I only advise all to pray to Allah as HE can deliver us from the pharaoh of these days….. Recommend

  • Ramesh
    Dec 13, 2015 - 3:16PM

    Quest for 72 virgins is more important. ghawza-e-hind is the ultimate truth.Recommend

  • Hameed
    Dec 13, 2015 - 3:36PM

    Are rangers going to investigate this too? Obviously not as it is being done by the biggest province.Recommend

  • Zahid Jamil
    Dec 13, 2015 - 3:49PM

    There is no reason for concern the Ministry of IT has a gift for further decline in Parliament : the worst cybercrime bill in the history of the world which is about to be passed. It will surely contribute to Pakistan’ exports and FDI further falling. With such regressive economic and investment policies we need not worry our little heads about such petty matters as the interest of Pakistan. Just buckle up for the ride. Recommend

  • Rizwan Rauf
    Dec 13, 2015 - 4:10PM

    Stupid article its just projections do you think IMF or World Bank are fools to keep lending you when they know you cannot payback and Chinese are idiots who will be investing in CPEC , all countries in the world take loans US has the highest amount of external debt so does that make US bankrupt or failed state ?Recommend

  • Minority Reporter James Anderson UK
    Dec 13, 2015 - 4:33PM

    So most of our predictions over the years that Pakistan will become Chinatown is realizable sooner than later…Of course Pakistanis needn’t worry as it is their all weather friends sweeter than honey Chinese who will be their new Land Lords and not the Hindu enemies next door.

    If this thinkable happens, then this will become a case study in economics class as to how a nation which inherited similar human index 60 years back and with 2 giant markets as their neighbours has forced itself into bankruptcy due to ‘Religious Egotism’ without using Nukes.Recommend

  • Dec 13, 2015 - 4:46PM

    Nobody in Pakistan has guts to ask the govt how it happened.The successive military govt had made the matter worst.Since most of the time the military has governed the country so the blame goes to them.Can someone tell me how much money will be paid as interest and how much money will be spent to eradicate illiteracy and poverty? Very soon we will see another Argentina or Greece in the making.Recommend

  • Pops
    Dec 13, 2015 - 5:04PM

    Sell some nukes, you don’t need that many!Recommend

  • Saad
    Dec 13, 2015 - 5:10PM

    Ask China to buyout Pakistan for $100 billion. After a neat profit, it will China’s headache.Recommend

  • Farhan
    Dec 13, 2015 - 5:13PM

    @Faisal Ali Ahmed: If this ever happens, Saudi Arabia will stand just like old day… Never expect anything from IranRecommend

  • Farhan
    Dec 13, 2015 - 5:14PM

    @Ramesh: go and keep reading your terrorist study guide called ‘Maha Bharat’ Recommend

  • ishrat salim
    Dec 13, 2015 - 5:29PM

    This is analysis is a very serious issue, yet I have not observed any sane comments which may give some solutions to the impending problem looming over the horizon. PML N supporters thinks that CPEC will resolve the debt problem without realizing that it is itself full of debts & presently without details. This is a dangerous trend on the part of the govt, which must present this kind of scenario in the parliament before seeking more loans. Recently signed Qatar Gas deal is another deal dubious contract which has been signed without discussion in the parliament, because our present PML N rulers thinks they are kings & not answerable to the people, yet when there is dharna they run to the parliament then, seeking support from the lawmakers declaring ” democracy in danger “. This is a sad scenario & our literate class will not understand but keep on supporting these greedy rulers because they are the least sufferers.

    The above analysis by renowned economists should be an eye opener for NS & Mr Dar, but who cares. Their bags are packed & are ready to leave on a moments notice leaving us all in the lurch to face the music.Recommend

  • nadeem
    Dec 13, 2015 - 5:55PM

    Mr Dar is not interested in collecting taxes from his rich friends. If these jokers just started collecting income taxes from the rich (direct taxation, instead of the current indirect taxation), at least 50% of the debt would be wiped off instantaneously. That’s how normal states function, they raise revenue by fair taxation, i.e. the rich pay more and the not-rich pay less tax. But this government knows only 3 things: borrow, borrow, borrow. Recommend

  • Skywalker
    Dec 13, 2015 - 6:11PM

    We will spin more conspiracy theories.
    A beautiful nation was born on demand in 1947. Pakistan wasted most of its resources on fighting wars for others, including Kashmir.
    A beautiful nation made a pauper, by its leaders who squandered it all on its neighbors.Recommend

  • SEAsian
    Dec 13, 2015 - 6:30PM

    What do you mean by “nobody will allow a nuclear state to fail”?
    They have already allowed it – N.Korea and now Pakistan. The debt-trap will only get worse from here.Recommend

  • AKBAR Khan
    Dec 13, 2015 - 6:57PM

    What else can be expected from such leadership whose fortunes are built on loans from Pakistani Banks than defaulting and forgiving loans through use of power.

    Unfortunately the loan forgiveness is not the case because these thieves does not rule IMF or. world Bank.Recommend

  • Naresh
    Dec 13, 2015 - 9:04PM

    @observer: This is all hogwash. This analysis ignores the fact that $50B of Chinese money is on the way with another $100B to follow in the years to come. All debt will just vanish in no time, thanks to our Chinese all-weather friends.
    Sir Ji : Pakistan will be surely be able to pay off it debts with the US$ 150 Billion of Chinese Money. Having said that how will Pakistan repay the Chinese Debt of US$ 150 Billion?

  • Commentor
    Dec 13, 2015 - 10:07PM

    @observer:As to the comment you made, I’d like to point out that, while the Chinese $50 billion will indeed prevent pakistan from going into an economic crisis, it is a loan, not a gift or gratuity but a loan. One that will need to be repayed eventually. The $50 billion will not reduce pakistan’s debt to $40 billion from $90 billion. Rather it will increase it to $140 billion. While the loan is being given at a very low rate owing to China being able to access trade routes to the middle east via pakistan, in the end of the day do not rely on the loans to save pakistan. Once China can trade with the middle east, pakistan’s exports will fall further owing to it loosing out on its biggest trade partners.Recommend

  • Sadiq
    Dec 13, 2015 - 10:10PM

    Today I googled about Indian external debt and they have almost crossed 500 billion dollars and we are still under 100.Recommend

  • Khan
    Dec 13, 2015 - 10:11PM

    Firstly, he’s the former PPP minister, so he has a polituc objective, and it’s curious that his numbers are higher than IMF. Secondly, CPEC will result in $11 billion in loans, and we have information about those loans – they are being distributed at an extremely low 1.6% interest rate. It’s all over the internet if he just looked. It’s even on Wikipedia with sources cited. He’s making CPEC look secretive when in reality he just didn’t even bother looking.Recommend

  • Khan
    Dec 13, 2015 - 10:15PM


    Tell me, how will pakistan economy grow without proper infrastructure, and how do third world countries pay for infrastructure? Pakistan isnt sitting on a bunch of oil, so we need loans. Other agencies like world bank give infrastructure loans at 5-8.5% interest rates, but we are getting loans at 1.6% from CPEC. You can’t build an economy without infrastructure. If you think otherwise, you’re living in a fools paradise. Recommend

  • Last Word
    Dec 13, 2015 - 11:00PM

    Gen Musharraf gave a very appropriate slogan ‘Pehle Pakistan’ but due to country’s obsession with its neighbour turned into ‘Pehle Hindustan’. Pakistan has destroyed its fragile economy which could not sustain due to arms race with India. Some powerful circles in Pakistan overstated external threat to remain predominant wasted foreign aid purchasing military hardware and accumulating nuclear arsenal totally neglecting its economy. The deadly embrace with the terrorist groups against neighbours actually became Pakistan’s Achilles heel further weakened country’s economy and stability. Pakistan should take cue from Turkey which from an authoritarian state has turned into progressive one with a vibrant economy. Nothing is impossible but change of mind-set is required by its power establishment to make Pakistan a progressive state. Recommend

  • Bilal
    Dec 14, 2015 - 12:26AM

    Thank your Mr Sharif and Zardari. Please keep on giving them vote.. turn by turn. Recommend

  • gary
    Dec 14, 2015 - 2:41AM

    Pakistan must make peace with India for any development in the country. Trade must take place and the borders should be open for transit trade. What good is the strategic position if it is not used and exploited for the betterment of the country and its people.Recommend

  • Aleem
    Dec 14, 2015 - 3:53AM

    Borrowing is fine. Its a circular issue. Pakistan is looking to expand revenue streams. In the short to medium term borrowing will increase making the external debt larger. However the borrowing is allowing for growth. At a later point when there is sufficient growth and the revenue streams grow due to the growth in the economy, then the government can accelerate the debt retirement process. Recommend

  • Bilal
    Dec 14, 2015 - 4:10AM

    Shame on pmln , ppp and their supportersRecommend

  • Surya
    Dec 14, 2015 - 7:33AM

    Selective reasoning will not get any credibility. Look at the List of countries by external debt in Wiki and note that even US, UK, China has large debts.

    More important is to measure the external debt by % of GDP and yours is way above than India even on current terms which is set to increase based on the above article.Recommend

  • Surya
    Dec 14, 2015 - 7:34AM

    Selective reasoning will not get any credibility. Look at the List of countries by external debt in Wiki and note that even US, UK, China have large debts.

    More important is to measure the external debt by % of GDP and yours is way above than India even on current terms which is set to increase based on the above article.Recommend

  • Ajay
    Dec 14, 2015 - 2:44PM

    Dear Sir, You are very wrong to suggest Pakistanis to focus on trade with India. Perhaps you dont know that Trade is for Baniya class people like Indians. Pakistanis are progenies of Tughlaq, Taimur and Ghori. Thats why they have named their missiles on these looteras. Pakistanis are warrior class people. They dont bother for trade and Commerce. They fight to keep their religion flag high. You dont know that Pakistanis are self styled Choudhary of all Muslims of South East Asia and also trying to be saviours and protectors of Arabian Muslims because they are only Islamic Country with Nuclear weapon. It is another matter that their own East Pakistani Muslims revolted against them and were successful in coming out of their clutches. It is also true that Arab people dont respect them because despite being Muslim they are poor. But so what? they are Nuclear Power. This nuclear thing is everyday published in their newspapers to remind the world of Nuclear Powered Pakistan. You should not advice them to do trade. They will earn riches by conquering Kashmir and fighting for USA as mercenaries. Science & Technology, Industry, Trade & Commerce, peaceful coexistence in secular style is not for the Pakistanis. They are a different breed and class.Recommend

  • Jimbo
    Dec 14, 2015 - 7:43PM

    I think Pakistan could close down its debt in a few simple steps:

    a) Start making rich Pakistanis pay tax. Don’t rely on a handful of big foreign investors to pay all the taxes.
    b) Make factories pay for the electricity they use. If they don’t, cut them off.
    c) Get the security situation back to 1990s levels, when England used to play Test matches in Peshawar. This will aid foreign investment, and improve tax collection.
    d) Accept the fact that you already trade with India, but that the trade is being round-tripped via third ports. You may as well do that trade directly – it’s more efficient.
    e) Gang up with other countries (Nigeria, India) against the British. London makes it very easy to hide cash there, and its time the British were embarrassed into changing this state of affairs.Recommend

  • Dec 14, 2015 - 10:19PM

    First of all we should look up the reasons that why do we need to borrow from abroad. at the moment we have exports of $ 24 billion and imports of $40 billions so trade deficit of $ 16 billions approximately. Simultaneously we have to pay installments of previous loans ( Principal amount plus interest payments) of $ 8.5 billions, so we are in need of approximately $ 24 billions annually. In order to arrange this amount we are helped by overseas Pakistanis; in the form of remittances sent by them annually up to $ 12 billions on average. but for rest of the $12 billion we need to either borrow from IMF and other international lenders or look for some foreign direct investment which is not sustainable in long run. the long run sustainability lies in increasing our exports for arrangement of foreign exchange which unfortunately does not seems improving in near future rather our exports are falling drastically specially manufacturing due to shortage of energy, worsening law and order situations and increasing costs of doing business in Pakistan. so Dr. Pasha is right in his concerns we also should think about this. CPEC is not a sustainable solution after some time it will also increase more outflows from our country and resulting more pressure over our balance of payments and value of our currency due to its increased supply in Forex market. any way if we don’t plan now we or our children will have to suffer in future. lets not to depress and hope for the best. Allah is there, He will help us Inshaullah, but we ourselves should take some appropriate measures to achieve our long term aims and objectives, as it si said God helps those who help themselves.Recommend

  • Pops
    Dec 14, 2015 - 11:12PM

    And did you also google India’s gdp?Recommend

  • Tony Singh
    Dec 15, 2015 - 3:18PM

    “We have nukes. No one will allow a nuclear power to fail.”
    There is a first time for everythingRecommend

  • Pak Soul
    Jan 25, 2016 - 3:32PM

    How about getting an effective tax system? 6th largest nation pays only 0.5% taxRecommend

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