Pakistan’s international debt burden continued to rise in FY2023-24, reaching a whopping Rs 63,966 billion by the end of August. This represents a massive increase of Rs 14,506 billion over the past year.
The foreign debt’s component of this burden now stands at $24,174 billion, while the local debt component stands at Rs 39,791 billion.
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The Pakistani government has been struggling to contain its dues burden for some time now. In August 2022, the volume of loans was a comparatively modest Rs 49,571 billion, with the foreign debt standing at $18 trillion and the local dues standing at Rs 32,152 billion.
IMF Demands Tax Collection Plan
The International Monetary Fund (IMF) has been pressuring the Pakistani government to take steps to reduce its debt burden. The IMF has demanded a tax collection plan of Rs 6670 billion for FY23-24 as a condition for the release of the next tranche of its loan to Pakistan.
The IMF has also demanded a report on the progress of tax cases pending in courts. The FBR has shared details of one million new taxpayers in the tax net with the IMF team. The IMF has demanded details of the tax that the FBR is collecting from each sector.
Challenges Faced by Pakistani Government in Reducing Debt Burden:
The Pakistani government is facing a number of challenges in trying to reduce its dues burden. The country’s economy is weak, and the government is struggling to generate enough revenue to meet its dues obligations. The government is also facing pressure from the IMF to implement austerity measures, which could further weaken the economy.
- The Pakistani government has taken some steps to reduce its burden in recent years. For example, it has increased tax collection and reduced subsidies. However, these measures have not been enough to offset the growth in debt.
- The IMF has played a key role in supporting Pakistan’s economy. It has provided loans to the country and helped to implement economic reforms. However, the IMF has also been criticized for its tough austerity measures, which have had a negative impact on the poor.
- The Pakistani people are playing an important role in addressing the country’s debt burden. They are demanding that the government take steps to reduce corruption and improve transparency. They are also calling for the government to invest in education and healthcare in order to boost economic growth.
It is important to note that there is no easy solution to Pakistan’s debt crisis. The government will need to take a number of steps, including increasing tax collection, reducing government spending, and implementing structural reforms. However, the government will also need to overcome a number of challenges, such as a weak economy, political instability, and public resistance to austerity measures. The Pakistani people will also need to play their role in addressing the debt crisis by demanding good governance and transparency from the government.
Conclusion
It is unclear how the Pakistani government will be able to reduce its dues burden in the near future. The country is facing a number of challenges, and it is likely that the dues burden will continue to rise in the coming years.