Pakistan’s Army Chief Syed Asim Munir warned the government against rising foreign debt. He emphasized the need to make the country self-reliant to end the dependency on foreign loans, which the cash-strapped nation recently secured with the International Monetary Fund (IMF), as reported by Geo News.
He was addressing the opening ceremony of Khanewal Model Agriculture Farm on Monday. While addressing this, the Chief of Army Staff of Pakistan said, “Pakistanis are a proud, zealous, and talented nation. All Pakistanis must throw out the beggar’s bowl.”
Amid severe economic turmoil, Pakistan is looking at international agencies for economic aid, especially from China. While Pakistan received one round of loans worth $ 1 billion from China, the country is still cash-starved with the looming threat of defaulting on accumulated foreign debt.
Interestingly, Pakistan ended up paying $1.30 billion to settle a Chinese loan which was refinanced by China. Recently, Pakistan’s Finance Minister Ishaq Dar confirmed the settlement of Chinese loans which were early granted to Pakistan for certain projects.
As per the latest report, Pakistan is set to receive another loan from China. Prime Minister Shehbaz Sharif recently said that Pakistan has received a rollover of an additional $ 600 million loan from its all-weather ally China to help shore up the country’s foreign exchange reserves. This is in addition to the loans Pakistan secured from the International Monetary Fund (IMF).
After a herculean effort, Pakistan did manage to secure a conditional loan of $3 billion from the IMF, which is termed a stand-by arrangement (SBA). The stringent conditions are primarily aimed at restructuring civic tax and tightening government expenditure, including arms purchases by the military.
Earlier, the IMF scrapped a four-year Extended Financing Facility program of $6.5 billion for Pakistan, which was negotiated under the government led by former Prime Minister Imran Khan in 2019. Denying the terms of the loans, the IMF called for a fresh round of negotiations, which were in tune with the stringent conditions, including the reforms within the Pakistan Central Bank.
In July, the Pakistan government’s debt swelled to $ 2.44 billion, including $2.07 billion in non-guaranteed debt owed to China, as per Geo News.
In fact, as per official data, Pakistan’s total debt has crossed the benchmark level with an amount of $ 77.5 billion that the country is required to pay between April 2023 and June 2026. This comes around 22 percent of the country’s GDP.
Currently, Pakistan’s foreign exchange reserves are $4.5 billion while the country has to repay loans of $8.3 billion in three months.
In the deepening crisis, Pakistan’s army chief has been donning a diplomatic role, looking for economic aid as he visited Saudi Arabia and the United Arab Emirates. General Munir sought urgent financial assistance from the Gulf monarchies to prevent Islamabad from defaulting on its loans.
The army chief also said that Allah Almighty has blessed Pakistan with all blessings and no power in the world can stop the country’s progress.
General Munir said a state is like a mother and the relationship between the people and the state is of love and respect. He said security and the economy are interlinked and indispensable to each other.
However, despite the immediate disbursement of $1.2 billion, the economic woes seem to continue without any robust economic recovery plan.
The IMF is keeping a close watch by setting up a monitoring committee as the SBA would set up policy guidelines and a framework for financial support from multilateral and bilateral partners in the period ahead.
Several economists, including global financial institutions, have warned that while Pakistan has been borrowing from bilateral lenders—China– and global financial institutions, it does not have any restructuring plan for reviving industrial activities to repay the loans.