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Economic Times
2 days ago
- Business
- Economic Times
Debt-ridden Pakistan is about to face a PKR 6,552,700,000,000 bomb in a few months
Pak in Debt: Pakistan is facing a $23 billion external debt repayment bill this fiscal year, the highest in its history. Nearly half of the federal budget is now going to debt servicing. Even as Islamabad seeks bailouts and rollovers from allies like Saudi Arabia and China, the government continues to spend billions on defence deals. With no guaranteed relief and increasing pressure from lenders, Pakistan's financial future is hanging by a thread. Tired of too many ads? Remove Ads Lifeline or liability? $12 billion in temporary deposits $5 billion from Saudi Arabia $4 billion from China $2 billion from the UAE $1 billion from Qatar Tired of too many ads? Remove Ads $11 billion still to pay regardless $1.7 billion in international bond repayments $2.3 billion in commercial loan payments $2.8 billion to multilateral creditors including the World Bank, Asian Development Bank, Islamic Development Bank, and Asian Infrastructure Investment Bank $1.8 billion in bilateral loan repayments Debt now consumes nearly half of federal budget Military spending continues despite fiscal strain Tired of too many ads? Remove Ads A crisis years in the making Pakistan has kicked off its new fiscal year with a massive repayment bill of over $23 billion in external debt, The News reported, citing the Pakistan Economic Survey 2024–25. The government must settle these payments during 2025–26, and failure to do so could place the country on the edge of the end of March 2025, the country's total public debt stood at Rs 76.01 trillion. That includes Rs 51.52 trillion in domestic borrowing (roughly $180 billion) and Rs 24.49 trillion (around $87.4 billion) in external loans. The external debt is made up of two parts: money borrowed by the government and funds drawn from the International Monetary Fund (IMF).This debt has built up over years of economic mismanagement, stop-gap funding, and repeated bailouts. But this year's repayment demand has exposed just how little room the government has left to the $23 billion Pakistan must repay this year, $12 billion comes in the form of temporary deposits from four so-called friendly nations, as reported by PTI. These are:These funds are not permanent and are only useful if rolled over. If any of these countries decide to pull out, Pakistan will be forced to pay them back in full this News cautioned, 'The situation can worsen if friendly countries refuse to grant rollovers on their deposits, which would make it compulsory for the government to make payments.'This leaves the government heavily dependent on diplomatic goodwill, not financial strength. And there are signs that even goodwill is wearing if all the temporary deposits are extended, Pakistan must still cough up around $11 billion in repayments to external creditors this year, as reported by PTI. This includes:This pressure comes at a time when Pakistan's foreign reserves are already under stress. The country has limited sources of fresh income and is still waiting for a new extended programme from the has earmarked Rs 8.2 trillion for domestic and external debt servicing in its 2025–26 budget. That figure makes up 46.7 per cent of the total federal budget of Rs 17.573 simply, nearly half the money Islamabad plans to spend this year is going towards repaying old is now less left for development, public services, or even basic maintenance of existing infrastructure. Education, health, and social welfare continue to take a backseat while interest payments dominate national this bleak financial outlook, Pakistan's defence expenditure has not slowed. While seeking bailouts and rollovers, the government has pressed ahead with large arms has finalised a strategic partnership with Turkey, which includes a $900 million drone deal and more than 700 loitering munitions. The partnership also covers intelligence sharing and broader security alliance has been described as one meant to 'do jihad against India' by military sources cited in reports. There are also ambitious trade goals of $5 billion tied into the Pakistan is reportedly acquiring 40 J-35A stealth fighter jets from China, supposedly at a discounted deals reflect the enduring priority given to military parity, particularly with India, even as the country's own economy remains current position is the result of decades of reckless borrowing, lack of fiscal discipline, and a powerful military establishment unwilling to scale military, which has long seen itself as the guardian of national stability, has also been a major recipient of foreign aid and loans. Much of that money, critics say, has gone not into productive assets or economic upliftment but into defence and result is a hollow economy, propped up by emergency funding, foreign deposits, and repeated IMF Pakistan hopes for another round of diplomatic backing, there's no guarantee this time. Saudi Arabia has already begun demanding more reform and transparency before offering further help. China, facing its own economic headwinds, is also proceeding more even one major depositor refuses to roll over its funds, Islamabad will have no choice but to pay. And with limited reserves and few avenues for quick capital, that could lead to further economic distress or forced now, Pakistan is racing the clock. The first repayments are due in a matter of months. And there's little sign of a long-term fix in sight.(With inputs from PTI, IMF)
Time of India
2 days ago
- Business
- Time of India
Debt-ridden Pakistan is about to face a PKR 6,552,700,000,000 bomb in a few months
Pakistan has kicked off its new fiscal year with a massive repayment bill of over $23 billion in external debt, The News reported, citing the Pakistan Economic Survey 2024–25. The government must settle these payments during 2025–26, and failure to do so could place the country on the edge of default. By the end of March 2025, the country's total public debt stood at Rs 76.01 trillion. That includes Rs 51.52 trillion in domestic borrowing (roughly $180 billion) and Rs 24.49 trillion (around $87.4 billion) in external loans. The external debt is made up of two parts: money borrowed by the government and funds drawn from the International Monetary Fund (IMF). 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But this year's repayment demand has exposed just how little room the government has left to manoeuvre. Lifeline or liability? $12 billion in temporary deposits Of the $23 billion Pakistan must repay this year, $12 billion comes in the form of temporary deposits from four so-called friendly nations, as reported by PTI. These are: $5 billion from Saudi Arabia $4 billion from China $2 billion from the UAE $1 billion from Qatar These funds are not permanent and are only useful if rolled over. If any of these countries decide to pull out, Pakistan will be forced to pay them back in full this year. Live Events The News cautioned, 'The situation can worsen if friendly countries refuse to grant rollovers on their deposits, which would make it compulsory for the government to make payments.' This leaves the government heavily dependent on diplomatic goodwill, not financial strength. And there are signs that even goodwill is wearing thin. $11 billion still to pay regardless Even if all the temporary deposits are extended, Pakistan must still cough up around $11 billion in repayments to external creditors this year, as reported by PTI. This includes: $1.7 billion in international bond repayments $2.3 billion in commercial loan payments $2.8 billion to multilateral creditors including the World Bank, Asian Development Bank, Islamic Development Bank, and Asian Infrastructure Investment Bank $1.8 billion in bilateral loan repayments This pressure comes at a time when Pakistan's foreign reserves are already under stress. The country has limited sources of fresh income and is still waiting for a new extended programme from the IMF. Debt now consumes nearly half of federal budget Pakistan has earmarked Rs 8.2 trillion for domestic and external debt servicing in its 2025–26 budget. That figure makes up 46.7 per cent of the total federal budget of Rs 17.573 trillion. Put simply, nearly half the money Islamabad plans to spend this year is going towards repaying old loans. There is now less left for development, public services, or even basic maintenance of existing infrastructure. Education, health, and social welfare continue to take a backseat while interest payments dominate national spending. Military spending continues despite fiscal strain Despite this bleak financial outlook, Pakistan's defence expenditure has not slowed. While seeking bailouts and rollovers, the government has pressed ahead with large arms deals. It has finalised a strategic partnership with Turkey, which includes a $900 million drone deal and more than 700 loitering munitions. The partnership also covers intelligence sharing and broader security cooperation. The alliance has been described as one meant to 'do jihad against India' by military sources cited in reports. There are also ambitious trade goals of $5 billion tied into the arrangement. Additionally, Pakistan is reportedly acquiring 40 J-35A stealth fighter jets from China, supposedly at a discounted rate. These deals reflect the enduring priority given to military parity, particularly with India, even as the country's own economy remains fragile. A crisis years in the making Pakistan's current position is the result of decades of reckless borrowing, lack of fiscal discipline, and a powerful military establishment unwilling to scale back. The military, which has long seen itself as the guardian of national stability, has also been a major recipient of foreign aid and loans. Much of that money, critics say, has gone not into productive assets or economic upliftment but into defence and patronage. The result is a hollow economy, propped up by emergency funding, foreign deposits, and repeated IMF interventions. While Pakistan hopes for another round of diplomatic backing, there's no guarantee this time. Saudi Arabia has already begun demanding more reform and transparency before offering further help. China, facing its own economic headwinds, is also proceeding more cautiously. If even one major depositor refuses to roll over its funds, Islamabad will have no choice but to pay. And with limited reserves and few avenues for quick capital, that could lead to further economic distress or forced austerity. For now, Pakistan is racing the clock. The first repayments are due in a matter of months. And there's little sign of a long-term fix in sight.
Express Tribune
13-07-2025
- Business
- Express Tribune
Non-formal education enrolment rises 20 per cent
A 20% increase has been recorded in enrollments in Pakistan's non-formal education sector, according to the 2023-24 National Non-Formal Education (NFE) Statistical Report. The document has been released by the Pakistan Institute of Education (PIE). Non-formal education has been described as a "second-chance model" that is cost-effective, flexible, and community-based. The monthly cost per child ranges between Rs 1,000 to Rs1,500, considerably lower than the expenses of formal education systems. The annual report, presented a detailed snapshot of the country's non-formal learning landscape, spotlighting both achievements and persistent gaps. The number of non-formal education centers across the country has reached 35,427, serving over 1.29 million learners, reflecting a 20% increase in enrollment compared to the previous year. The report notes that in 2023-24, enrollments in non-formal education centers grew by 20%, with 57% of learners being girls, marking a promising step toward gender parity. Female teachers make up 82% of the workforce, demonstrating strong female participation in the non-formal education system. A total of 3,382 adult literacy centers are currently operational, serving 80,093 learners, indicating an increasing focus on youth and adult literacy. Additionally, 10,181 refugee children, mostly from Afghanistan, are enrolled in NFE programs. Innovative models like ALP (Middle-Tech) have been introduced, integrating both academic and vocational skills to improve retention and outcomes. Despite the progress, the report highlights substantial regional disparities, particularly in enrollment rates across remote and underserved areas. According to the Pakistan Economic Survey, female literacy remains significantly lower than male literacy, especially in rural Balochistan, where only 31% of women are literate. The latest UN report ranks Pakistan 164th out of 193 countries on the Human Development Index (HDI), and 144th out of 173 on the Human Capital Index (HCI), with education being a key contributing factor. Among the report's key recommendations is the expansion of ALP programs, particularly the Middle-Tech model, which boasts a 70% completion rate.
Business Recorder
26-06-2025
- Business
- Business Recorder
Budget 2025–26: Between recovery and reality
As the government tabled the federal budget for FY2025–26 on June 10, it did so against a backdrop of cautious optimism. The Pakistan Economic Survey 2024–25 painted a picture of an economy clawing its way back from the brink, supported by record-low inflation, fiscal discipline, and a current account surplus. Budget 2025–26 now attempts to build on that fragile stability, setting an ambitious fiscal trajectory while contending with the deep structural limitations of Pakistan's public finance system. The federal budget for FY2025–26 has been set at Rs 17.57 trillion, marking a 7 percent decline from the revised figures of the outgoing year. Of this, Rs 16.28 trillion is allocated to current expenditures and Rs 1 trillion to the Public Sector Development Programme (PSDP). Interest payments alone are projected at Rs 8.21 trillion, while defence expenditure has been increased to Rs 2.55 trillion. The government expects a fiscal deficit of 3.9 percent of GDP and a primary surplus of 2.4 percent, in line with IMF expectations for fiscal consolidation. The Economic Survey confirms that GDP grew by 2.68 percent in FY2024–25, driven by 3.42 percent growth in industry and 3.8 percent in services. Inflation, previously a key destabilizer, fell to an average of 4.7 percent between July and April FY25, down from 26 percent a year earlier. The current account recorded a US$1.9 billion surplus, thanks to a 31 percent increase in remittances (to US$31.2 billion) and a 6.4 percent rise in exports. Foreign reserves stood at US$16.6 billion as of April. However, growth in agriculture stagnated at 0.56 percent, large-scale manufacturing contracted by 1.47 percent, and foreign direct investment remained subdued at $1.8 billion reflecting in the fact that the recovery remains fragile and uneven. To finance this year's outlay, the government expects gross revenues of Rs 19.28 trillion. The Federal Board of Revenue (FBR) is tasked with collecting Rs 14.13 trillion in tax revenues, a nearly 40 percent increase over the previous year. Non-tax revenues are expected to add Rs 3.58 trillion, with the petroleum levy budgeted at a record Rs 1.468 trillion. As per the 7th National Finance Commission (NFC) Award, 57.5 percent of the divisible pool will be transferred to provinces, amounting to Rs 5.14 trillion. This leaves the federal government with a shrinking share to finance debt servicing, national defence, subsidies, and federal programmes a structural constraint repeatedly highlighted in the budget document. A defining feature of the budget is its revised tax regime for salaried individuals. To provide relief to the middle class, income tax slabs have been adjusted. No tax is due on annual income up to Rs 600,000. Income between Rs 600,001 and Rs 1.2 million is taxed at 1 percent, while rates for higher income brackets are 11 percent (Rs 1.2–2.2 million), 23 percent (Rs 2.2–3.2 million), and 35 percent for income above Rs 4.1 million. These revisions aim to marginally reduce the burden on lower-income earners, though inflation continues to weigh heavily on real incomes. To broaden the tax base and crack down on informal economic activity, the government has taken a tough stance on non-filers. Withholding tax on cash withdrawals by non-filers has increased from 0.6 percent to 1 percent. Additionally, non-filers will be barred from opening bank accounts, investing in mutual funds or securities, and purchasing vehicles or immovable property. These measures are part of a broader effort to increase documentation and compliance, although past experience suggests that enforcement will remain a major challenge. On the corporate front, the government has slightly reduced the super tax on high-income corporations from 10 percent to 9 percent. A new National Tariff Policy has been announced, promising gradual reductions in additional customs and regulatory duties. A carbon levy of Rs 2.5 per liter has been introduced on petroleum products, to be raised to Rs 5 per liter next year, in line with green finance commitments under the IMF's Resilience and Sustainability Facility. The budget makes space for social protection, albeit selectively. The Benazir Income Support Programme (BISP) has received a record allocation of Rs 716 billion, expected to support over 9 million families. Pension outlays have been set at Rs 1.055 trillion, and subsidies for the power sector at Rs 1.036 trillion. Despite these efforts, combined allocations for education, health, and population welfare remain under 2 percent of GDP far below international benchmarks. Human capital investment continues to lag behind, undermining long-term development goals. Climate change receives token attention in the budget. While the Economic Survey mentions carbon markets, green sukuks, and Article 6 cooperation under the Paris Agreement, the budget lacks specific allocations for climate adaptation or mitigation. Gilgit-Baltistan and Khyber Pakhtunkhwa, which offer immense potential in forest-based carbon credits remain excluded from federal fiscal incentives tied to environmental performance. Notably, forestry which offers one of the most viable and scalable options for carbon offset generation in Pakistan remains underfunded and absent from core budgetary priorities. Gilgit-Baltistan, Khyber Pakhtunkhwa, and parts of Balochistan, which hold significant forest reserves, could become leaders in nature-based solutions if adequately supported through fiscal incentives and carbon financing frameworks. Nominal GDP for FY2025–26 is projected at Rs 129.57 trillion, with growth expected to reach 3.6 percent. These targets hinge on sustained macroeconomic stability, improved investor confidence, and an uninterrupted flow of multilateral financing. Risks include global economic headwinds, geopolitical uncertainty, and Pakistan's limited fiscal space, which is heavily consumed by debt obligations. In essence, Budget 2025–26 reflects a cautious but necessary balancing act. It offers incremental relief to salaried taxpayers, strengthens social protection through BISP, and recommits fiscal responsibility under the IMF's watch. However, the structural issues persist: an overreliance on indirect taxation, underinvestment in people and climate, and a weak provincial-federal fiscal arrangement that curbs development ambition. The true test lies in implementation whether the promises made in this budget can be translated into lasting, inclusive, and sustainable economic resilience for the people of Pakistan. Copyright Business Recorder, 2025
Business Recorder
24-06-2025
- Business
- Business Recorder
A recipe for repeated failure
The finance minister recently presented the Pakistan Economic Survey 2024–25 with a tone of accomplishment, celebrating a six-decade low in inflation. At first glance, this appears to be good news for a country where millions continue to live below the poverty line. Indeed, any positive shift in macroeconomic indicators should be welcomed but only if it stems from meaningful, sustainable reforms. Unfortunately, that's not the case. We are walking a precarious path, chasing the illusion of economic stabilization while ignoring the deep-seated flaws in our system. It's a dangerous approach, one that treats the symptoms, not the disease, and sets us up for future failures. Take agriculture, not just a sector, but Pakistan's lifeline. Nearly 70 percent of our population relies on it, directly or indirectly. Yet, it continues to be sidelined. According to official data, major crop production declined by 13 percent this year, which is not a marginal slip, but a clear warning sign. The wheat crisis illustrates how political considerations repeatedly trump national interest. A failure to ensure fair pricing, combined with rising input costs like electricity and urea, has pushed farmers to the brink. With each planting season, they face higher risks and fewer rewards, definitely crushed by policy neglect dressed in populist slogans. If we cannot protect the very people who feed the nation, what kind of economic growth are we aiming for? The government's GDP growth target of 3.56 percent, already modest compared to our historical average of 4.5 percent%, wasn't even met. Blaming global headwinds masks a more uncomfortable truth: internal mismanagement and misplaced priorities. We keep pumping money into politically motivated but economically unproductive ventures, while high-return sectors like SMEs, technology, and export industries are left gasping for support. Our national budget is a reflection of this short-termism. Political optics consistently take precedence over long-term planning. As a result, the engines of real growth are being starved of fuel, while flashy but unsustainable projects grab headlines. Another fundamental weakness lies in our ever-expanding informal economy. Rather than integrating it into the formal structure, our policies encourage its continued existence. It's no secret that countless businesses operate without paying taxes or following regulations. Meanwhile, those who try to play by the rules are penalized burdened by audits, red tape, and higher taxes. In time, many either shut down or are forced to go underground just to survive. Unfortunately, budget 2025 followed by this Economic Survey has the fewest initiatives to increase the tax base. The policy is taxing the already taxed. What's worse is that the very institutions tasked with revenue collection often enable this dysfunction. Whether through neglect or collusion, their inaction erodes faith in the system and entrenches the culture of non-compliance. The services sector fares no better. Consider Pakistan's fast-growing freelance and remote work industry, driven by one of the youngest populations in the world. These digital workers require no subsidies and free laptops but just a clear, supportive policy environment. Yet they are met with uncertainty over payment gateways, taxation, and regulatory hurdles. Frustrated by the culture, many route their financial operations through Gulf countries, depriving Pakistan of valuable foreign exchange and economic potential. This is a tragic missed opportunity. With minimal effort, the government could unleash the power of this low-cost, high-yield export sector, generating jobs boosting foreign earnings, and empowering the youth. Instead, what we see is over-regulation, lack of trust, and a bureaucratic mindset that scares away innovation. Gen Z, inherently comfortable with digital finance, is a natural ally in our effort to document the economy. But rather than incentivizing their participation, the state often treats their financial activity with suspicion. The result? Fear, not confidence. Disengagement, not inclusion. If we're serious about formalizing the economy, we must start by winning public trust, simplifying compliance, and offering incentives rather than penalties. We've spent far too long lurching from crisis to crisis, mistaking temporary stability for genuine progress. What we need is structural transformation: bold reforms in agriculture, taxation, regulation, and service sector development. We need to stop punishing those who follow the rules and stop rewarding those who don't. We must shift our mindset from election cycles to generational thinking. Because the truth is: Pakistan has immense potential. We have the land, the talent, the youth, and a strategic location. But unless we address the foundational issues, surface-level improvements will do little to prevent long-term decline. Our economic managers must rise above the habit of number-polishing and narrative-spinning. The real challenge is not to lower inflation for a quarter, but to build a fair, inclusive, and future-ready economy. We don't need miracles. We need meaningful change and the courage to pursue it. Copyright Business Recorder, 2025
