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Growing risk of debt trap

Growing risk of debt trap

According to newspaper reports, Pakistan has been placed in the list of countries which could default on the repayment of external loans. This is the condition of the economy of which Finance Minister Ishaq Dar was bragged of all the way during his term in the office that his financial policies lead to achieving macroeconomic stability in the country. The other countries in the line of default are Egypt and Ecuador whereas Venezuela has already been declared defaulters. It is strongly apprehended that Pakistan will face debt servicing issue in the coming years. According to economists, Pakistan is running out of options and has to act before nothing is left to fall back. The policymakers of the country deemed it business as usual but the financial health of the country is posing serious challengesfor the government which has to be proactive to deal with the emerging situation. The government has gained $2.5 billion by floating international bonds, but the course of economy is strongly linked with export volume which has been diminishing for the last four years. It is feared that the huge gap between imports and exports would further deplete the foreign exchange reserves to the extent that the government would be unable to finance six week imports.

The government is facing balance of payments problem and the pressure has been rising in wake of weakening reserve position.The repayment obligations are also growing at a fast speedand the officials of International Monetary Fund are already monitoring the post-loan situation and dictating its terms to the authorities concerned to ensure the collection of money from the people by raising tax rates and duties under different heads. The money collected from the recently floated international bonds is peanuts as the country would need $10 billion to ward off the possible default during the current financial year. The so-called economic experts and finance managers, who are drawing hefty salaries and perks, have failed to give a positive direction to the economy and wasted the hard earned money on personal affairs. They should now stop boasting of their so-called successes which revolve around acquiring loans after loans. A country with 200 million people, good agricultural land and industrial base, has been mortgaged to the foreign lending agencies. The time has come the people at the helm of affairs should revise their policies and plans to extricate the nation from the rising debt crisis.