Most countries in the world today borrow money from various sources to finance their budget deficits. So do India and Pakistan. So why is it that only Pakistan's borrowing money gets labeled "begging"? Is it not begging when India borrows a lot more money than does Pakistan? Or is it that only borrowing money from the IMF qualifies as "begging"? Let's look into this double standard. Currently, India's public debt to GDP ratio is 80% while Pakistan's is about 74%. India's private debt to GDP ratio is 17%, twice that of Pakistan. Do these figures mean that India is a bigger beggar than Pakistan?
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| Debt-to-GDP Ratios Around the World. Source: Visual Capitalist |
India is consistently among the largest borrowers from International Financial Institutions (IFIs), particularly the World Bank and the Asian Development Bank (ADB). It has been the top debtor to the World Bank for several years and a major borrower from the ADB. India’s outstanding loan balance with the World Bank is almost double that of the next biggest debtor, Indonesia, which owed the bank $22.2 billion. Pakistan and Bangladesh followed with just short of $20 billion and $19.8 billion, respectively. India is also the largest borrower from the Asian Development Bank (ADB). Since 1986, when ADB began lending to India, it has approved many loans, grants, and technical assistance totaling $55.3 billion.
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| Top Debtors to World Bank 2025. Source: Visual Nerd |
One key difference between the two South Asian neighbors is the frequency with which Pakistan has been borrowing from the International Monetary Fund, known as the lender of last resort. Pakistani economic managers have had a poor track record of managing hard currency reserves that the country needs to import what it lacks. Pakistani exports have failed to keep pace with its rising imports. This situation creates a crisis situation every few years and it forces the country to ask the IMF to lend its US dollars. Currently, Pakistan ($6.3 billion) is IMF's 5th highest debtor after Argentina ($31.1 billion), Ukraine ($10.19 billion), Egypt ($8.6 billion) and Ecuador ($6.6 billion). The only saving grace is the rapid growth in remittances from the Pakistani diaspora. In the last fiscal year that ended in June, 2025, overseas Pakistanis sent home $38.3 billion, representing 27% growth from the prior fiscal year. It helped Pakistan achieve a current account surplus of $2.1 billion, compared to a current account deficit of $2.1 billion in the previous fiscal year.
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| Global Income Levels By Country. Source: Visual Capitalist |
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| Top IMF Debtor Nations. Source: IntelPoint |
Pakistan's average economic growth of 5% a year has been faster than the global average since the 1960s, it has been slower than that of its peers in East Asia. It has essentially been constrained by Pakistan's recurring balance of payment (BOP) crises as explained by Thirlwall's Law. Pakistan has been forced to seek IMF bailouts 14 times in the last 75 years to deal with its BOP crises. This has happened in spite of the fact that remittances from overseas Pakistanis have grown 38X since 2000. Every time Pakistan has faced a balance of payments crisis, the result has been massive currency devaluation, high inflation and slower growth for a period of multiple years. The best way for Pakistan to accelerate its growth beyond 5% is to boost its exports by investing in export-oriented industries, and by incentivizing higher savings and investments.
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24 comments:
Does this means that the US with its 121% debt-to-GDP ratio
of 121% and China, which has a debt-to-GDP ratio of 96% are bigger beggars than Pakistan.
SK: "Does this means that the US with its 121% debt-to-GDP ratio
of 121% and China, which has a debt-to-GDP ratio of 96% are bigger beggars than Pakistan"
Yes, going by your definition of a beggar country!
Hard to believe!
Their forex deposits are much much higher than Pakistan.
MS: "Their forex deposits are much much higher than Pakistan"
So how did India manage to build over $600 billion in US dollar reserves? The top contributor to India's reserves is debt which accounts for 48%. Portfolio equity investments are known as “hot” money or speculative money flows accounted for 23% of India's forex reserves, according to an analysis published by The Hindu BusinessLine.
https://www.riazhaq.com/2021/12/how-does-india-build-large-forex.html
India has never defaulted on it’s foreign debt.It came close ONCE in 1991 but didn’t default.The IMF loan was paid back in full and the gold it transported as collateral in July 1991 was back in December 1991.Indians still remember this episode as a national shame.Never Again!
Anon: "India has never defaulted on it’s foreign debt"
Pakistan has never defaulted on its loans either.
It has renegotiated terms and restructured loans but never defaulted.
And IMF plays the role it was created for: to be the lender of last resort.
Excellent Article Riaz Bhai …….. will send to many of my Indian friends who constantly keep criticizing Pakistan 🤪🤣🤣
Terry A.
"will send to many of my Indian friends".
Good luck with that, but chances are it is not going to make an iota of difference. Double standard is in their DNA.
G. Ali
Riaz: " So how did India manage to build over $600 billion in US dollar reserves? The top contributor to India's reserves is debt which accounts for 48%. Portfolio equity investments are known as “hot” money or speculative money flows accounted for 23% of India's forex reserves"
thanks Riaz!
Amazing, the games they play!
MS: "Amazing, the games they play!"
I think the Indians manage their hard currency holdings well. It helps their currency value and their economy. Pakistanis should learn from it.
S&P Global lifts Pakistan's credit rating 'B-' from 'CCC+', outlook stable | Reuters
https://www.reuters.com/markets/asia/sp-global-lifts-pakistans-credit-rating-b-ccc-outlook-stable-2025-07-24/
LONDON, July 24 (Reuters) - S&P Global raised Pakistan's sovereign credit rating to 'B-' from 'CCC+' and placed it on a 'stable' outlook on Thursday, saying the country's finances and reserves had been stabilised by International Monetary Fund support.
"The stable outlook reflects our expectations that continued economic recovery and government efforts to enhance revenue will stabilize fiscal and debt metrics," ratings agency S&P said in a statement on the move.
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https://www.dawn.com/news/1926320
Ratings agency S&P Global raised Pakistan’s sovereign credit rating to ‘B-’ from ‘CCC+’ and placed it on a ‘stable’ outlook on Thursday, saying the country’s finances and reserves had been stabilised by International Monetary Fund (IMF) support.
“The stable outlook reflects our expectations that continued economic recovery and government efforts to enhance revenue will stabilise fiscal and debt metrics,” S&P said in a statement on the move.
“We also expect that sustained official financing will support Pakistan in meeting its external obligations, and that the country will continue to roll over its commercial credit lines over the next 12 months.”
Pakistan’s longer-dated international bonds rallied after the upgrade, with the 2051 maturity gaining 1.6 cents to be bid at 84.85 cents on the dollar, according to Tradeweb data.
The 2031 and 2036 maturities also gained around 1 cent, while shorter-dated maturities posted smaller gains.
Last week, Finance Minister Muhammad Aurangzeb urgedthe leading US rating agency — Moody’s — to improve Pakistan’s credit rating and help its return to international capital markets at favourable conditions.
Moody’s had upgraded Pakistan’s credit rating by one notch in August 2024 to Caa2 from Caa3 (downgraded in February 2023 due to suspension of the IMF programme) and changed its outlook to positive from stable for improving macroeconomic conditions, including liquidity and external position from very weak levels.
Global ratings agency Fitch had upgraded Pakistan’s foreign currency credit rating to ‘B-’ from ‘CCC+’ in April, citing increased confidence in the country’s progress on narrowing its budget deficits.
Even most strong economies issue debt, incl. Germany. Debt is serviced regularly and there is ratings and standard interest rate mechanisms to punish undisciplined nations. India has BBB whereas Pak. was CCC until recently.
"of 121% and China, which has a debt-to-GDP ratio of 96% are bigger beggars than Pakistan"
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Gross mischaracterisation! Countries borrowing from debt market using financial instruments is totally different than a bankrupt country borrowing from an institutions or from "brotherly countries". In both cases, you are at the mercy of others - either an institution which signs the money or a dictator who can bankroll or insult you at any time. There is a reason why Pakistan is called beggar because it is at the mery of IMF or rich gulf countries and china.
Zen: "There is a reason why Pakistan is called beggar because it is at the mery of IMF or rich gulf countries and china"
The main reason for epithets like "bankrupt" or "beggar" applied to Pakistan is the Indian propaganda whose only purpose is to demean its neighbor.
The fact is that most of Pakistan's debt is domestically sourced from Pakistanis themselves.
Pakistan's public and publicly guaranteed debt is about 75% of GDP, with roughly 40% (of 75%) of that being foreign currency debt owed to external creditors.
As to external debt, both India and Pakistan and other developing countries borrow mostly from multi-lateral financial institutions like the World Bank and the Asian Development Bank where India is the biggest borrower in the world.
The rest of India's debt is concessional bilateral loans (considered official development assistance or aid) from Japan, US, France and Germany.
Most of Pakistan's bilateral loans are from China and the Gulf nations.
Watch this: https://youtu.be/2wl9FKmcQLA?si=_CvUB2CjVW6HlC6v
"Most of Pakistan's bilateral loans are from China and the Gulf nations." --> loan is a euphemism for begging or threatening. It may be more like threatening I believe or offering something back in transactional terms to china or gulf countries. In fact, it could be anything to be given back politically. That is also why the tiny UAE insulted Imran Khan (then PM) when his position was not aligning with that of UAE Sheikh's.
Here there is a huge difference to a country like US or germany whose debts can be rolled over mechanically when the debt maturity comes. In case of India, if Indian companies borrow internationally, and rupee weakens, then the companies are in trouble too. India is a donor as well in some cases.
Pakistan's weaknesses are structural and institutional level like you already commented.
"In case of India, if Indian companies borrow internationally, and rupee weakens, then the companies are in trouble too."
This is why only companies which have dollar revenues more than enough to service dollar loans are allowed to borrow in dollars.RIL,Tata Group etc.
Companies that have large dollar expenses but little dollar revenues like say IndiGo Airlines which buys 100s of jets from Airbus is NOT allowed to borrow in Dollars.Its rupees are converted to dollars by the RBI to purchase Jets.This policy effectively shields the Indian private sector from forex volatility risk.
Baniyas understand finance and its clear there are patriotic Baniyas running India's central Bank and overall Forex strategy.
Thanks for your comments Sir not just double standard in their DNA it is actually in their nature or blood to deny anything that is written or said against India and Indians no matter if it's true.
According to the Indians anything that is said against India is a lie no matter if it is true and anything which is said in favour of India is right and true no matter if it is really false.
India's foreign debt jumps 10% to USD 736.3 bn in March 2025: RBI
https://www.etnownews.com/economy/indias-foreign-debt-jumps-10-to-usd-736-3-bn-in-march-2025-rbi-article-152167991
India's external debt increased by 10 per cent to USD 736.3 billion as of March-end 2025 compared to USD 668.8 billion in the year-ago period, the Reserve Bank said on Friday. As per GDP percentage, the external debt increased to 19.1 per cent at the end of the recently concluded financial year from 18.5 per cent a year ago, it added, as reported by news agency PTI.
In a year which saw some volatilities in the currency markets, the RBI said the "valuation effect" due to the appreciation of the US dollar against the rupee and other currencies amounted to USD 5.3 billion, while if one were to exclude the valuation effect, external debt would have increased by USD 72.9 billion instead of USD 67.5 billion in the year, PTI reported.
The overall debt comprised of USD 261.7 billion of loans taken by non-financial corporations, USD 168.4 billion by the government and USD 202.1 billion by deposit-taking corporations, excluding the central bank, the RBI said.
At March-end 2025, long-term debt (with an original maturity of above one year) was USD 601.9 billion, an increase of USD 60.6 billion over the year, as reported by news agency PTI.
The share of short-term debt (with original maturity of up to one year) in total external debt declined to 18.3 per cent at March-end 2025 from 19.1 per cent a year ago, but the ratio of short-term debt to foreign exchange reserves increased to 20.1 per cent in FY25 against 19.7 per cent at the end of March 2024.
US dollar-denominated debt remained the largest component of India's external debt with a share of 54.2 per cent at March-end 2025, followed by debt denominated in the rupee (31.1 per cent), yen (6.2 per cent), SDR2 (4.6 per cent), and euro (3.2 per cent), the RBI said.
Loans remained the largest component of external debt, with a share of 34 per cent, followed by currency and deposits (22.8 per cent), trade credit and advances (17.8 per cent) and debt securities (17.7 per cent), reported PTI.
"Companies that have large dollar expenses but little dollar revenues like say IndiGo Airlines which buys 100s of jets from Airbus is NOT allowed to borrow in Dollars.Its rupees are converted to dollars by the RBI to purchase Jets.This policy effectively shields the Indian private sector from forex volatility risk."
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@Anon
I don't know the current status, but remember reading a while ago about Indian companies which borrowed in USD getting into trouble at a time when there was weakness in Indian economy. The measure you wrote makes sense, but whether it is a institutional policy or a market measure I'm not sure.
Forex management is not the ultimate measure of success. Whether interest rate and economic policies of RBI align with the interest of majority of poor Indians is a totally different topic.
Maybe you are referring to the Tata Group’s problem in servicing dollar loans taken to buy JLR and Corus after the rupee depreciated post 2008 recession .Tata Group was saved by TCS ~10 billion USD annual Forex earnings denominated in dollars back then..that was enough(barely) for Tata Group to service it’s dollar loans and survive.Even though it’s much bigger now with $160 Billion annual revenue and has a robust balance sheet you will observe Tata’s as an organization have lost their appetite for mega acquisitions.I can’t recall anything big after 2009..
@Anon
Yes, I was referring to that only (related to acquisition of Steel, Jaguar etc. in UK probably..not fully sure). In any case, some sound financial management and multi year growth have made their balance sheets healthier. But Indian cos. would face the dilemma of growing abroad without acquisitions.
‘Tata’s as an organization have lost their appetite for mega acquisitions.I can’t recall anything big after 2009..’
Well…guess who’s back..but yeah their annual revenue in FY25 was USD 180 Billion so this time around they are not betting the company..TCS alone nowadays brings in more than USD 30 billion in dollar revenue.
https://timesofindia.indiatimes.com/business/india-business/tata-motors-looks-to-buy-italian-truck-maker-iveco-deal-likely-at-4-5-billion-set-to-be-tata-groups-second-biggest-acquisition/amp_articleshow/122987271.cms
"Beggar" Pakistan is the 4th largest country and the 6th largest entity donor to the World Food Program. "Rich" India is missing from the top contributors list:
https://www.wfp.org/funding/2024
The top 15 largest contributors to global food programs, primarily the UN World Food Programme (WFP), are a mix of national governments and international organizations. The United States consistently ranks as the largest single donor, followed by Germany. Other significant contributors include the European Commission, various European nations, Japan, and the UN CERF (Central Emergency Response Fund).
Here's a more detailed breakdown:
National Governments:
United States: The largest bilateral donor, contributing billions of dollars annually, according to the Government Accountability Office (GAO).
Germany: The second-largest donor, contributing hundreds of millions of dollars annually.
Other European Nations: Including, but not limited to, France, Sweden, Norway, and Switzerland.
Japan: A significant contributor to the WFP.
Canada:
Pakistan:
International Organizations:
European Commission:
UN Central Emergency Response Fund (CERF):
Other UN Funds and Agencies (excluding CERF):
Other Notable Contributors:
Private Donors: Globally, private donors also contribute significantly to the WFP.
South Korea:
Australia:
United Kingdom:
Saudi Arabia:
https://www.instagram.com/p/DMs0D6SvK_Y/
Everybody, except PM Modi, FM Sitaraman, know India's is 'dead economy': Rahul Gandhi
https://www.newindianexpress.com/nation/2025/Jul/31/everybody-except-pm-modi-fm-sitaraman-know-indias-is-dead-economy-rahul-gandhi
Congress leader Rahul Gandhi on Thursday slammed the Modi government, claiming that India has become a "dead economy" under its rule.
He said that everyone except Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman is aware of the economic crisis facing the country.
Speaking to reporters at the Parliament House complex, Gandhi alleged that the BJP-led government has "destroyed" India’s economic, defence, and foreign policies.
His comments came in response to U.S. President Donald Trump's recent remarks describing India and Russia as "dead economies" while announcing new tariffs and penalties on Indian imports.
"He is right, everybody knows this except the prime minister and the finance minister. Everybody knows that the Indian economy is a dead economy. I am glad that President Trump has stated a fact."
"It is a dead economy, are you people not aware of it," he asked reporters.
He also alleged that the BJP has destroyed the Indian economy to help billionaire Gautam Adani.
"The external affairs minister gives a speech that we have a genius foreign policy. On one hand, the US is abusing you and on the other hand China is after you. And thirdly, when you send delegations across the globe, no country condemns Pakistan. How are they running the country? They don't know how to run the country," Gandhi said, asserting that there is "total confusion" prevailing.
https://x.com/RahulGandhi/status/1950819074323386755
Reiterating that the BJP-led government has "destroyed" the country's economic, defence and foreign policies, Gandhi said, "They are running this country to the ground... The prime minister works only for one person -- Adani. All small businesses have been wiped out," he alleged.
Gandhi also claimed that any upcoming trade deal with the United States would be dictated by Washington.“Trump will define the deal, and Modi will simply follow orders,” he added.
Referring to Modi's speech in Lok Sabha on Tuesday, Gandhi said the prime minister neither took Trump's name nor that of China.
"He (Modi) did not say that no country condemned Pakistan. Trump is having lunch with the Pakistan military chief who was behind the Pahalgam attack, and they are saying there has been a big success. What success is this," he asked.
"Trump has said 30 times that I got the ceasefire done (between India and Pakistan). Trump said five planes of India were downed, and he is now saying I will put a 25 per cent tariff (on India). Did you ask yourself why Modi is not able to answer, what is the reason? Who has the control," he asked.
Meanwhile, the BJP called Gandhi's statements a "shameful" insult to the aspirations, achievements, and well-being of the people of the country.
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