China’s debt of Pakistan draining all its money
Pakistan is hardly able to balance its inflation and Chinese debt is squeezing its finances. Pakistan has to pay USD 14 billion at the end of this financial year. Part of the debt is from a Chinese commercial bank which is linked to Belt and Road initiative, according to a report.
Experts say that Pakistan needs to ask Beijing’s financial authorities to reschedule its debts. It will ease pressure on the State Bank of Pakistan at a time when the bank’s foreign reserves fell to USD 17 billion in October.
Earlier in April, the International Monetary Fund had warned that Pakistan’s public debt sustainability was being undermined due to policy slippage and mounting contingent liabilities.
The World Bank’s Debt Report 2021 — which analysed the debts of South Asian countries — showed Pakistan lagging behind India and Bangladesh.
The report also emphasised that it was more comparable with debt-beleaguered Sri Lanka.
According to the WB report, Pakistan was the second nation after Sri Lanka among countries with a debt-to-GDP ratio exceeding 80 per cent. But if Pakistan’s net revenue, excluding the share of the provinces, is calculated then it ranks even higher than Sri Lanka.
On Friday, Pakistan’s Senate was told that internal debt increased from Rs 16 trillion (USD 91 billion) to 26 trillion (USD 148 million) over this period. Similarly, external debts swelled from Rs 8.5 trillion (USD 48.3 billion) to Rs14.5 trillion (USD 83 billion) in the same period. On these loans, the ministry said, the government paid Rs7.46 trillion (USD 42.4 billion) in interest.