A number of Pakistani economists and newspaper columnists are fretting about what they call "Pakistan's Debt Crisis". They claim that Pakistan's national debt has risen dramatically over the last 8 year. Putting in perspective, it seems to me that they are raising an unnecessary alarm. While it is true that Pakistan's total external debt has increased by about 10% since 1999, it is also true that Pakistan's GDP has more than doubled.
Here are the facts:
In 1999 Pakistan’s total debt as percentage of GDP was the highest in South Asia – 99.3 percent of its GDP and 629 percent of its revenue receipts, compared to Sri Lanka (91.1% & 528.3% respectively in 1998) and India (47.2% & 384.9% respectively in 1998). Internal Debt of Pakistan in 1999 was 45.6 per cent of GDP and 289.1 per cent of its revenue receipts, as compared to Sri Lanka (45.7% & 264.8% respectively in 1998) and India (44.0% & 358.4% respectively in 1998).
Most recent figures in 2007 indicate that Pakistan's total debt stands at 56% of GDP, significantly lower than the 99% of GDP in 1999. It also compares favorably with India's debt-to-GDP ratio of 59% and Sri Lanka's 85% in 2007. From being the highest debtor nation in South Asia, Pakistan has, in fact, become the lowest debtor nation in its region and achieved economic growth rate of about 7% a year during the last 6 years.
Sources: CIA World Fact Book
Jubilee Research
State Bank of Pakistan
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4 comments:
Thankyou so much for these positive articles abt Pakistan. There is alot to worry abt in Pakistan, but some of your articles make me happy abt our future! Keep writing.
Pakistan faces serious challenges but it also has many successes. I talk about both in my writings. The challenges I have blogged about include rising violence, ominous consequences of upcoming elections,the energy crisis and the wheat crisis. But I also talk about things that have gone well over the last 8 yeats ...such as sustained economic growth, telecom boom, investment boom, growing middle class (with rising incomes) essential for establishing civil society, rule of law and real democracy etc.
Pakistanis are a very resilient nation. Pakistan has defied many gloom and doom forecasts since its birth. I am hopeful that Pakistanis will come through the current crises better and stronger than ever.
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Here's a report from The News about Pakistan's growing debt.
Tuesday, March 30, 2010
KARACHI: Pakistan’s debt sustainability indicators deteriorated in July-Dec 2009 as external debt and liabilities were up, while foreign exchange earnings remained stagnant and the economy slowed down, the SBP said in its report.
The total external debt as percentage of GDP as well as debt servicing to export earnings ratio worsened during the period under review, the bank said. The stock of external debt and liabilities increased by $4.7 billion to reach $55.8 billion in the first half of the current fiscal year, it said.
External debt servicing was $2.648 billion by end of Dec 2009, up 9.7 per cent from the same period of the previous year, as the country repaid bilateral creditors, multilateral donors and private non-guaranteed debt. Yet, almost 25 per cent the increase in external debt and liabilities was due to depreciation of the US dollar against major currencies, the SBP in its report said.
With $180 billion GDP, Pakistan's debt to gdp ratio is about about 30%.
While I agree that it can become a serious problem if not properly tackled, I also think it can be managed if the economy starts to grow again soon. That's the real challenge for Pakistan right now.
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