Debt facts: where does our Pakistan stand?

The global economy has witnessed four waves of debt accumulation over the past 50 years. The first three waves resulted in a financial crisis in many emerging and developing economies.

According to World Bank report "Global Waves of Debt" published in 2019, the latest global debt wave since 2010 has caused the largest, fastest and most broad-based increase in debt in emerging and developing economies.

Taken together, their total debt rose 54 percentage points of gross domestic product (GDP) to a historic peak of almost 170 percent of GDP in 2018. This number has continued to climb and the debt burden of least developed countries surged to a record $744 billion in 2019.

Responding to a call from the World Bank and the International Monetary Fund (IMF), the G20 endorsed the Debt Service Suspension Initiative (DSSI) in April 2020 to help 73 of the poorest countries in the world manage the impact of the Covid-19 pandemic. Pakistan was also eligible for this initiative.

Latest data from the International Debt Statistics 2021, compiled by the World Bank, shows that amongst the 73 countries eligible for debt service suspension, Pakistan has the highest monthly debt servicing requirement, standing at $346.9 million.

The country's total external debt increased 8 percent in 2019 relative to the previous year. It was primarily due to increase in IMF credit.

A country's capacity to bear rising debt levels can be judged from the debt servicing-to-exports...