Presented by: Amna, Tehreem, Mulaika, Eisha, Hamna
Historical Current state Factors
Understanding
Introduction Overview of of Pakistan’s contributing to
National Debt
Pakistan’s Debt Debt the debt crisis
International Sustainability Debt
Impacts of the
aid and of Pakistan’s management Conclusion
debt burden
borrowing debt strategies
• Overview of Pakistan’s Economic Situation
• Struggling with economic instability
• Increasing reliance on loans to meet financial needs
• Impact on essential sectors like education and healthcare
• Significance of the Debt Burden Issue
• Rising debt affects economic growth
• Limited resources for public welfare and infrastructure
development
• Long-term challenges for future generations
• Objective of the Report
• Analyze the causes and impacts of Pakistan’s debt
burden
• Explore sustainable solutions to address the crisis
• National Debt
Total borrowing by the government to cover budget deficits
• Types of National Debt
• Domestic Debt: Borrowed within the country
• External Debt: Borrowed from foreign sources (e.g., IMF, World Bank)
• How National Debt is Incurred
• Government expenditures exceeding revenues
• Reliance on loans for development and operational costs
• Key Terms Related to Debt
• Debt-to-GDP Ratio: Measures debt relative to the economy’s size
• Debt Servicing: Payments of principal and interest on borrowed funds
Post-independence (1947-1970s):
1970s-1980s
1990s-2000
2010s-present
1.Latest statistics (2022-2023)
• Total debt
• Domestic debit
• External debt
2. Breakdown of debt:
• Short-term debt
• Long-term debt
3. Debt-to-GDP ratio analysis:
• Current debt-to-GDP ratio
Economic Impact of Global
Mismanagement and Financial Conditions
Inefficiency
Political Instability Structural
and Policy Weaknesses in
Changes the Economy
Economic Social implications Impact on future
consequences (education, healthcare, generations and
(growth, inflation, poverty reduction) intergenerational
etc.) equit
• Role of International Financial Institutions:
⚬ Provide loans to stabilize Pakistan’s economy.
⚬ Focus on structural reforms and poverty alleviation.
⚬ Examples: IMF's Extended Fund Facility (EFF), World Bank’s
development projects.
• Terms of Loans and Conditionalities:
⚬ High-interest rates and short repayment timelines.
⚬ Conditionalities include fiscal discipline, reducing subsidies, and increasing
taxes.
⚬ Impact on sovereignty: Decision-making influenced by lender priorities.
• Debt Servicing and Economic Effects:
⚬ Rising debt service payments reduce funds for development.
⚬ Increased burden on foreign exchange reserves.
⚬ Adverse impact on inflation and public sector spending.
• Indicators of Debt Sustainability:
⚬ Debt-to-GDP ratio exceeds 70%: Sign of economic strain.
⚬ Debt service-to-revenue ratio: High allocation to debt repayment.
⚬ Slow GDP growth hindering ability to manage debt.
• Comparison with Other Developing Economies:
⚬ Pakistan’s debt-to-GDP ratio higher than regional averages.
⚬ Relatively low tax revenue mobilization compared to peers.
⚬ Overreliance on external borrowing versus domestic revenue generation.
• Risks of Debt Default and Consequences:
⚬ Default risks due to falling foreign reserves and rising liabilities.
⚬ Consequences include loss of investor confidence and higher borrowing
costs.
⚬ Possible devaluation of currency, hyperinflation, and social unrest
• Proposed solutions for reducing the debt burden
• Increase revenue generation
• Improving the quality of primary spending
• Debt rescheduling
• Debt duy-back
• Importance of fiscal reforms and economic diversification
• Tax reforms and broadening the tax base
• Improving taz administration and laws
• Reform that diversity of economic sectors and promote exports
• Investments in human capital
• Policies that encourage foreign investment
• Role of local resources and international cooperation
• Encouraging domestic savings (hight intrest rates) to reduce reliance on foreign borrowing
• Privatisation of public sector organisations to increase efficiency and scale of operations
• Explore and develop natural resources (hydropower and minerals)
• Economic reforms (by promoting exports, investing in human
capital, attracting FDI)
• Fiscal management ( reducing the fiscal deficit and increasing tax
revenue)
• Monetary policy (intrest rate and exchange rate management)
• Debt management (negotiating terms of debt)
• International cooperation (IMF, debt relief, foreign investment)
