Pakistan will struggle to break out of cycle of debt repayments: Imran

Ex-PM says his party would prioritise domestic reforms over seeking debt relief if it returns to power

Pakistan will struggle to break out of a cycle of ongoing debt repayments without reform, former prime minister Imran Khan told the Financial Times in an interview.

Imran told the publication that the government needed to break out of borrowing cycles that have held back developing economies. He, however, ruled out a default if his party returned to power, saying it would prioritise domestic reforms over seeking debt relief.

"Whatever we do, when we look ahead, the debt is growing, our economy is slowly shrinking. From my party's point of view, we've started thinking that we're stuck," the report quoted him as saying.

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The remarks came as the country is in talks with International Monetary Fund (IMF) to secure the final tranche of $1.1 billion since February. This amount is part of a larger $6.5 billion bailout package.

Finance Minister Ishaq Dar has repeatedly assured regarding sealing the dealing with the global lender. On Wednesday, an IMF official expressed confidence that the agreement would be signed "soon".

Imran Khan criticised the government's inability to pull the country out of its current economic crisis. He emphasised the need to break free from the borrowing cycle that has hindered the growth of developing economies.

He asserted that Pakistan would struggle to overcome the cycle of debilitating debt repayments without implementing significant reforms. The former premier said that his party would prioritise domestic reforms over seeking debt relief, ruling out a default.

The Financial Times quoted Khan explaining his plans to revive the economy, which included restructuring loss-making state-owned enterprises and expanding the tax base.

He questioned whether borrowing more money was the solution to the country's financial problems or whether restructuring the government's operations was necessary.

Khan also highlighted that the country's dollar income needed to improve or increase if it were to pay off its debts. He questioned how Pakistan would be able to service its debts if it did not increase its dollar earnings through exports.

He stressed that increasing exports was essential to servicing all of Pakistan's debts, including commercial debts, Chinese debts, and debts owed to the Paris Club.

With additional input from Reuters