Pakistan owes the world $85.5 billion and China is its single largest lender, contributing nearly 18% of the total foreign loans it has taken. Saudi Arabia, Japan, the UAE, and France are among other major lenders.
Of all the multilateral agencies, the International Development Association (IDA) of the World Bank Group is our biggest lender with a 16% share in our total foreign loans followed by the Asian Development Bank which accounts for 12.5% of the total.
The IMF’s share in the total outstanding amount is less than 7%.
The data for this infographic has been sourced from a July-2019 report by the IMF.
On July 3, Pakistan secured a $6 billion bailout programme, its 13th since 1980s, from the IMF. The IMF dollars will help Pakistan improve its dwindling foreign exchange reserves, which stand at their lowest level in five years. The country has little over $7 billion in its reserves, barely enough to sustain two months of imports as opposed to the international threshold of three months.
We are in this default-like situation because of our inability to earn dollars. For every dollar earned, Pakistan spends two because our exports have remained stagnant, at times fallen, for nearly 10 years. Foreign direct investment is not increasing either while imports keep rising. The dollar drain put Pakistani rupee under pressure, which has depreciated by 29% since August 2018.
To address this economic imbalance, the government has knocked on the doors of friendly countries like China, Saudi Arabia, the UAE, and Qatar and received aid packages. On the other hand, it has increased duties on luxury imported items and given subsidies to export-oriented sectors so our trade loss can be reduced to a level, which is sustainable.