Heavily in debt.

PAKISTAN'S foreign debt and liabilities have been increasing rapidly over the last several years. The government is forced to borrow heavily from external sources - including multilateral and bilateral creditors, and commercial lenders - in order to meet its foreign debt repayment obligations, as well as to finance its budget, development and imports.

Its growing need for dollars has compelled the country to periodically knock at the doors of the IMF over the last three decades, at the cost of economic growth, to avert potential defaults on foreign repayment obligations and shore up forex reserves. With cheaper and softer bilateral and multilateral flows becoming scarce, the government's reliance on expensive foreign commercial debt is rising. In November alone, it was forced to borrow $1.1bn from commercial lenders, pushing up the total debt flows in the first five months of the present financial year to $4.5bn. According to the economic affairs ministry, the new debt inflows so far constitute 37pc of the annual budget estimates of foreign borrowings of $12.4bn for the entire fiscal.

There are multiple reasons why Pakistan has turned into a heavily indebted nation. The exponential growth in foreign debt levels underscores that the country has been unable to attract adequate non-debt-creating, long-term inflows like FDI or increase its exports, which remain stuck at $23bn-$24bn a year, to meet its external account requirements. The extremely low level of formal domestic savings as reflected by banking deposits means that the government would have to depend on foreign savings to finance its budgetary...