Pakistan's Economic Challenges: Army Chief Urges Self-Reliance amid Rising Foreign Debt

Pakistan's Army Chief, Syed Asim Munir, has expressed concern over the country's rising foreign debt. He emphasized the importance of becoming self-reliant to reduce dependency on foreign loans, including those secured from the International Monetary Fund (IMF). Munir made these remarks at the opening ceremony of the Khanewal Model Agriculture Farm.

The economic situation in Pakistan is challenging, and the country is seeking international aid, especially from China. While Pakistan received a loan of $1 billion from China, it still faces financial difficulties and the risk of defaulting on accumulated foreign debt. Recently, Pakistan settled a $1.30 billion Chinese loan that was refinanced by China for certain projects.

Pakistan is set to receive another loan from China, worth an additional $600 million, to bolster its foreign exchange reserves. Additionally, the country secured a conditional loan of $3 billion from the IMF under a stand-by arrangement (SBA). The conditions of this loan require restructuring civic tax and reducing government expenditure, including military expenses.

Debt accrued by the Country

Earlier, the IMF canceled a four-year Extended Financing Facility program of $6.5 billion for Pakistan, which was negotiated in 2019 under the government led by former Prime Minister Imran Khan. The IMF called for fresh negotiations with more stringent conditions, including reforms within the Pakistan Central Bank.

Pakistan's total debt has surpassed $77.5 billion, and the country is required to repay this debt between April 2023 and June 2026, which amounts to about 22% of the country's GDP. Currently, Pakistan's foreign exchange reserves are $4.5 billion, while it needs to repay loans of $8.3 billion within the next three months.

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Amid the economic crisis, Pakistan's army chief has taken on a diplomatic role, seeking financial assistance from Saudi Arabia and the United Arab Emirates to prevent loan defaults. He expressed optimism about Pakistan's potential for progress and said the relationship between the people and the state is of love and respect.

Despite receiving immediate disbursements of $1.2 billion, Pakistan's economic challenges persist without a robust plan for economic recovery. The IMF is closely monitoring the situation and has established a monitoring committee to set policy guidelines and financial support frameworks from various partners in the future.

Economists and financial institutions have warned that while Pakistan borrows from bilateral lenders like China and global financial institutions, it lacks a comprehensive plan for reviving industrial activities to generate income for loan repayments. Addressing these economic issues is crucial for the country's financial stability and sustainable development.