Pakistan’s foreign debt repayments are projected to reach $100 billion over the next four years, as disclosed during a meeting of the National Assembly’s Standing Committee on Finance. This comes at a time when the country’s foreign reserves stand at just $9.3 billion.
The Finance Ministry informed the committee that there is a $5 billion external financing gap for the next three years, which has been addressed through measures identified by the IMF. The $7 billion Extended Fund Facility (EFF) agreement with the IMF is pending approval, expected by September 25, 2024.
The ministry also outlined plans to collaborate with provincial governments to rebalance federal and provincial spending, in alignment with the 18th Amendment, particularly in areas like education, health, and infrastructure. Provinces will be required to increase tax revenues, with adjustments to the Agriculture Income Tax regime in line with federal tax policies.
Additionally, Director General of the Debt Office, Mohsin Chandna, stated that the debt-to-GDP ratio has declined to 67.2% of GDP, despite challenges. However, tax-to-GDP has worsened.
MNA Nafisa Shah from the PPP inquired about alternatives to borrowing, but was told that further loans are essential to manage the country’s outstanding debt. The ministry reaffirmed its commitment to reforms in the energy sector and maintaining a flexible exchange rate to stabilize the economy.
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