Debt and denial.

A Pakistani Finance Minister during the course of 2021-23 trying to manage debt must be cursing his luck. Earlier, a pandemic caused havoc and any full or partial debt servicing relief by the lenders and wealthy relating to the same ended in December 2021, and as if that was not enough for a vulnerable economy like that of Pakistan, Russian tanks rolled into Ukraine in February 2022 and jumpy investors began to ditch Pakistan's financial instruments (bonds, sukuk, etc.), because invariably as investors move to minimise risk from portfolios, the weaker instruments are always first to suffer amidst a financial market chaos. The problem didn't end here for us: In March 2022, the Federal Reserve of the US began to raise interest rates to tackle inflation at home (a phenomenon and a level it had not witnessed in more than two decades) thereby making financing increasingly pricy around the world in general and for developing economies in particular; and then the final nail in the coffin, China, Pakistan's closest and most dependable friend and one of the largest economic partners of Pakistan started the struggle in itself owing to its rumbling property-debt problem and a skewed lockdown policy to achieve zero Covid-19.

All this compounded by some critical policy follies of our own doing collectively took its toll. Certain needless populist policies (petroleum prices to name one) by the Khan government and a rapidly deteriorating economic situation saw IMF move in to put us on the list of 23 most distressed economies (or at high risk) of the world and even suspended its on-going program for want of certain tough measures it demanded from the Pakistani government to. Thereafter, we saw musical chairs of finance ministers making the situation get from bad to worse with even today the lender of the resort, IMF, still shying away from stepping in. Needless to say that during this period 3 out of the 23 countries have already defaulted (including those of Zambia and Sri Lanka) and quite a few others stand on the brink.

In addition to the above the alarming bad news is that Pakistan sits amongst the world's highest interest payment bills relative to its revenues. This leaves virtually no space for any kind of public spending on health or education and almost nil fiscal space for development projects. In 2010, Pakistan was spending around 5 percent of revenues servicing foreign loans, which today has jumped to almost 30 percent-in fact with each...

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