‘Cash-strapped Pakistan may face serious economic crisis’

Pakistan Flag [Image for representational purpose only]
Pakistan Flag [Image for representational purpose only]

Lahore: Cash-starved Pakistan could face a serious economic problem as its foreign exchange reserves are depleting fast amid rising external debt servicing, according to a media report on Wednesday.

The country’s external debt servicing rose to $ 10.886 billion in the first three quarters of 2021-22 compared to $ 13.38 billion in the entire FY21. It was just $ 1.653 billion in 1QFY22 against $ 3.51 billion in the first quarter of 2020-21, but it jumped to $ 4.357 billion in 2QFY22 and to $ 4.875 billion in 3QFY22.

The country has been facing a serious threat from its external front as the State Bank of Pakistan’s foreign exchange reserves fell to single digits despite a $ 2.3 billion inflow from China late last month, the Dawn newspaper reported.

The increasing size of the external debt servicing in each quarter indicates the government has been borrowing dollars at higher commercial rates to meet its foreign debt repayment obligations, the report said.

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