Strained Reserves.

In light of outstanding loans that are yet to be paid, along with a rising current account deficit, the Ministry of Finance and Economic Affairs Division has predicted that the internal sector will be put to the challenge in the upcoming fiscal year. As a solution, the government has embarked upon a search for new resources and rightly so. However, the fear is that we may be getting trapped in a vicious debt cycle if our fix to the problem is more loans. It is vital that we stay away from a path that will create hardships for years to come.

According to various reports, our government must pay back $7 billion within the first six months of the current fiscal year-$10.4 billion if we take into account the entire year. This is an extraordinary amount of debt, the repayment of which several countries across the globe are entitled to.

Owing to the pandemic, Pakistan was fortunately one of the few countries that qualified for temporary debt relief. Matters would have been much worse if the amounts also had to be paid back with interest.

Add to this conundrum the problem of the current account deficit which...