FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 06 August 2015

Pakistan's Unstable Economic Situation: Excessive Debts Disastrous for the Economy.

Written by

Pakistan's current debt burden has placed their economy in a very delicate situation. The government of Pakistan has borrowed almost $950 million from banks in the past one year. Pakistan is highly relying on it domestic debt which is adversely affecting the fiscal outlook of the country resulting in very little fiscal stability.

The country's government debt to GDP ratio is 64.30 as of December 2014. This figure is quite alarming because the government isn't doing much in terms of raising tax revenues to improve the fiscal outlook.


Pakistan's foreign debt is a mammoth $42 billion, even though this sum is a lot less than what some other nations owe, this is not an accurate perspective of the entire debt situation. That is because if some countries owe a lot of money to other nations, or if their foreign debt is much more than Pakistan, their financial position is still probably better than Pakistan due to the fact that they themselves have a lot of net creditors as well. However, Pakistan does not have many net creditors to claim a stable financial position instead they have been very close to defaulting. But emergency domestic loans have prevented this from happening.

For any developing nation, efficient debt management is required for sustainable economic growth. Pakistan's government severely needs to adopt this strategy. The nation's foreign debt has been increasing consistently over the past few years hampering the economy's progress in a big way.

There are various factors that are behind this debt crisis for Pakistan. Firstly, Pakistan has been quite politically unstable over the past few years. The country is a major victim of terrorism which plays a vital role in discouraging potential investors (domestic and international). This has had an adverse impact on the economy which forces the government to take loans in order to maintain stability. Also, the ever increasinging debt-to-GDP ratio isn't helping the stumbling nation's cause either. This is a result of a massive decline in tax revenue over the years. Corruption has played a huge role in this aspect as only a fraction of people pay their taxes. In Pakistan, corruption occurs at the highest of levels which has a negative impact on economic growth and other business operations.

Pakistan's fiscal deficit is increasing day by day due to a major energy crisis and growing security concerns that lead to high defense spending. As a result, this causes the foreign debt to further pile up. In order to improve the current economic outlook of the country, the government must both (1) cease their approach of excessive domestic borrowing and (2) reduce their dependence on loans from other countries.


A developing nation such as Pakistan, where more than 60% of the people live below the poverty line cannot withstand the effects of these debts as it further worsens standard of living and well being of Pakistani citizens.

To conclude, the ever rising burden of debt is one of the prime factors hampering the growth of Pakistan's economy. Until or unless the government of Pakistan doesn't take a few ambitious measures regarding debt, the nation's economy will stumble to further crisis.

Click here for Historical News Post Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.

You can also comment using Facebook directly using he comment block below.

Econintersect Contributors


Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Take a look at what is going on inside of
Main Home
Analysis Blog
Rising Tide Does Not Lift All Ships
Comments on Feyerabend’s ‘Against Method’, Part II
News Blog
Docking A Huge Cruise Ship Is More Complicated Than You Think
New Seasonal Outlook Updates from NOAA and JAMSTEC - Let's Compare Them.
Infographic Of The Day: Driving Into A Battery Powered Future
Earthquake Risk - Location Matters
Investor Alert: Be On The Lookout For Investment Scams Related To Hurricane Matthew
Lost In Translation: Five Common English Phrases You May Be Using Incorrectly
The Size And Scope Of Samsung's Business
Immigration Is The Top Worry For Britons
People Killed By Russian Airstrikes In Syria
Have You Taken These 4 Simple Steps To Improve Your Trading?
14 October 2016: ECRI's WLI Growth Index Insignificantly Declines
Mom Breaks Down In Tears When Son With Autism Meets Service Dog
Rail Week Ending 15 October 2016 Paints A Negative Economic View
Investing Blog
FinTech Is Taking A Bite Out Of Banks
Options Early Assignment - Should You Worry?
Opinion Blog
US 2016 Election: Will US-China Relations Change
Prop. 51 Versus A State-Owned Bank: How California Can Save $10 Billion On A $9 Billion Loan
Precious Metals Blog
How Will The Election Outcome Impact Precious Metals?
Live Markets
21Oct2016 Market Close: Major US Indexes Close Flat On Low Volume, Crude Prices Resume Climb, US Dollar Stabilizes In Mid 98 Handle, Yes, Most Investors Are Worried Which Way This Market Will Go
Amazon Books & More

.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government

Crowdfunding ....



Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved