Debt repayment problem.

PAKISTAN owes the world about $100 billion and has to repay $21bn to foreign lenders during the current fiscal year. And during the next three years, it will have to return similar or larger amounts each year totalling about $70bn.

So what happens four years from now? Will we have repaid about $90bn to our creditors and owe only $10bn? Unfortunately, no. We have no resources to repay our lenders. We will just have to try to borrow from one creditor to pay off another.

Hence four years from now, we will have to repay the world more than $21bn we have to pay this year, and a little more each year after that. Therefore, Pakistan will continue to slide more and more into debt, unless we try a novel idea: export more and run a current account surplus. Then and only then will we be able to pay back the world without borrowing from someone. But until then we are in a tight spot.

To understand how we got to this predicament, let's back up a bit. When Pakistan became part of the war against Al Qaeda and their Afghan Taliban protectors, much of our external debt owed to the West was written off. So we were left with considerably reduced debt repayments and our foreign exchange requirements shrank.

Four years from now, we will have to repay the world more than $21bn we have to pay this year.

Our primary need for foreign exchange after 2002 was to finance our current account deficit, which is the excess of imports over exports and remittances. As we accumulated CADs every year, our debt increased every year.

Remember, because we don't run current account surpluses, and hence never earn net foreign exchange, we only borrow foreign exchange from one source to repay another and our debt is never repaid and only grows.

After Gen Musharraf's government in 2007-08 ran Pakistan's highest CAD, the incoming PPP government had to reduce this deficit by slowing the economy down. But once the economy slowed, our foreign exchange borrowing requirements came down and the economy more or less stabilised.

Because Pakistan's economy wasn't doing well and we weren't in an IMF programme, the world wasn't willing to lend to us and our foreign exchange borrowing didn't go up much. However, after five years of drift we were in the midst of a debilitating power shortage by 2013.

Enter the PML-N, and two things happened. One, we entered into an IMF agreement and, two, an agreement was reached with China on CPEC. Now we could get investments and borrow from China for power...