Daily Times

The government celebrated when G20 counted Pakistan among countries that were extended the Debt Service Suspension Initiative (DSSI) in the immediate aftermath of the pandemic, as if it had scored a victory of some sort, but it turns out that the only reason we became eligible was because we are among the 10 most indebted countries in the whole world. That means we are not in fine company since the rest of them are Angola, Bangladesh, Ethiopia, Ghana, Kenya, Mongolia, Nigeria, Uzbekistan and Zambia. So much for the celebratory tweets fired at the time by almost all senior ministers.

Also mentioned in International Debt Statistics in 2022, released by the World Bank, is the fact that FDI inflows to Pakistan fell five percent year-on-year in 2020. That means we’re losing non-debt creating foreign exchange just when our debt burden is becoming among the largest in the world. So far Islamabad is doing what it can to downplay the urgency of dealing with the debt phenomenon, at least for public consumption, but the kind of loans we have to pay back and the quantity of foreign exchange in the SBP’s vaults should have already sounded very loud alarm bells there.

All that the government has had to say on this issue so far is that G20 should extend the DSSI and completely write off some if not all of the debt of poor countries. Suffice to say, of course, that such wishful thinking will get us nowhere. Because there is no way that even a dollar of our debt, or anybody’s debt for that matter, can be erased no matter how much we beg and plead. In fact, unless there is a very serious effort to do something about this problem, the debt time bomb will tick all the way to an eventual default. Ominous as it sounds, there’s little else that can happen when countries get to the point that they have to continuously draw more debt to pay back old debt and then look for more debt just for day-to-day affairs. Such loans are never paid back in full. So an out-of-the-box solution will have to be worked out sooner rather than later. *