Pakistan's Borrowing Dilemma: Balancing Growth and Debt

Pakistan’s economy presents a mixed picture, with both promising developments and areas of concern. In the fiscal year 2022-23, Pakistan's GDP growth was reported at around 2.8%, a slowdown compared to the previous years due to several challenges, including the aftermath of the COVID-19 pandemic, high inflation, and significant external debts.

Inflation remains a critical issue, averaging around 27% in mid-2024, which has strained the purchasing power of the average Pakistani. To tackle the economic challenges, Pakistan has relied heavily on borrowing from international financial institutions and bilateral partners. According to the State Bank of Pakistan, the country’s total external debt reached a staggering $127 billion by June 2024, highlighting a dependency on foreign loans to bridge fiscal deficits and finance development projects.

Criticism of Pakistan’s borrowing habits focuses on the lack of sustainable economic planning and the burden of high-interest repayments. Many experts argue that continuous borrowing without structural economic reforms leads to a vicious cycle of debt. They advocate for measures such as broadening the tax base, improving public sector efficiency, and investing in export-oriented sectors to create a more sustainable economic model.

In conclusion, while Pakistan's economy has shown resilience, it faces significant challenges that require prudent fiscal management and strategic economic reforms to ensure long-term stability and growth.