Abdul Basit Alvi
Pakistan is facing the worst economic crises in the history. According to a report published in April this year by Shahbaz Rana on the website of United States Institute of Peace, troublingly, Pakistan’s official foreign exchange reserves are hovering around $4 billion, which is insufficient to finance even a one-month of the country’s import bill. Report further said, As of December 2022, Pakistan holds external debt and liabilities of $126.3 billion. Nearly 77% of this debt, amounting to $97.5 billion is directly owed by the government of Pakistan to various creditors; an additional $7.9 billion is owed by government-controlled public sector enterprises to multilateral creditors. A major share of Pakistan’s debt is owed to multilateral institutions, amounting to roughly $45 billion. Islamabad’s main multilateral creditors include the World Bank ($18 billion), the Asian Development Bank ($15 billion) and the IMF ($7.6 billion). Pakistan owes smaller amounts to the Islamic Development Bank and the Asian Infrastructure Investment Bank as well. While a significant amount of Pakistan’s total debt, multilateral debt doesn’t present major short-term risks for Pakistan. The terms of most loans are largely concessional with a repayment timeline spanning 18 to 30 years; most repayments are spread in many small transactions. In 2022-23, Pakistan repaid a total $4.5 billion debt to multilateral creditors, which is a fifth of the total debt repayment for the year. Pakistan owes $8.5 billion to the Paris Club, a group of 22 major-creditor countries. This debt is scheduled to be repaid over 40 years with less than 1% interest rate, and is mostly owed to Japan, Germany, France and the United States. Pakistan holds a large amount of private debt; much of this is in the form of private bonds, such as Eurobonds and global Sukuk bonds, amounting to $7.8 billion. Some of this debt is recent: In the last fiscal year, Pakistan raised $2 billion by floating Eurobonds of 5, 10, and 30 years at an interest rate ranging from 6 percent for five years and 8.87 percent for 30 years. Pakistan holds foreign commercial loans to the tune of nearly $7 billion, which is likely to increase to nearly $9 billion by the end of the current fiscal year. Much of Pakistan’s commercial loan stock is owed to Chinese financial institutions, as Pakistan has repaid major non-Chinese commercial loans of institutions. Then further according to Report, Most commercial loans come with steep terms; they have to be repaid to the lenders between one to three years. The rates on the loans are high as well. Some are benchmarked against the London Interbank Offered Rate (also known as LIBOR). Others, like Chinese commercial loans, are pegged against the Shanghai Interbank Offered Rate (SHIBOR). For example, Pakistan recently obtained a $2.2 billion commercial loan from the China Development Bank at six-month SHIBOR rate plus 1.5 percent; this loan is to be repaid over a three-year period. Pakistan holds around $27 billion of Chinese debt. This includes around $10 billion of bilateral debt and $6.2 billion in debt provided by the Chinese government to Pakistani public sector enterprises, and Chinese commercial loans of around $7 billion. In addition, China’s State Administration of Foreign Exchange (SAFE) has placed $4 billion worth of foreign deposits with Pakistan’s central bank. The bilateral debt is on concessional terms with a maturity period of 20 years. In addition to the $27 billion in debt, Pakistan also has a currency swap facility with the Chinese. Pakistan’s large external debt comes with considerable repayment pressure. From April 2023 to June 2026, Pakistan needs to repay $77.5 billion in external debt. For a $350 billion economy, this is a hefty burden. The major repayments in the next three years are to Chinese financial institutions, private creditors and Saudi Arabia. Pakistan faces near-term debt repayment pressure. From April to June 2023, the external debt servicing burden is $4.5 billion. The major repayments are due in June when a $1 billion Chinese SAFE deposit and a roughly $1.4 billion Chinese commercial loan would mature. Pakistani authorities hope to convince the Chinese to refinance and rollover both debts, something the Chinese government and commercial banks have done in the past. Even if Pakistan manages to meet these obligations, the next fiscal year will be more challenging, as the debt servicing will rise to nearly $25 billion. This includes $15 billion of short-term loans and $7 billion in long-term debt, including a vital $1 billion repayment on a Eurobond in the fourth quarter. The short-term debt repayments include $4 billion Chinese SAFE deposits, $3 billion Saudi deposits and $2 billion UAE deposits; the Pakistani government assumes they will be rolled over by the creditors each year. Separately, Pakistan will need to repay another $1.1 billion of long-term commercial loans to Chinese banks. In 2024-25, Pakistan’s debt servicing is likely to be around $24.6 billion, which includes $8.2 billion long-term debt repayments and another $14.5 billion short-term debt repayments; this includes major repayments to Chinese lenders of $3.8 billion. In 2025-26, the debt servicing burden is likely to be at least $23 billion; that year Pakistan is to pay back $8 billion in long-term debt, including repaying $1.8 billion for a Eurobond and $1.9 billion to Chinese commercial lender. Readers, The facts and figures clearly depict the worst scenario for Pakistan. For Pakistan it is must to come out of these economic crises before going into elections. Then come to another point. Whole nation have seen what happened on May 9 and how a group of riots attacked on the military and civilian installations. They have done what our worst enemies could not do in 75 years. Whole nation demands that the culprits and terrorist of May 9 should be punished quickly to set an example. Civilian and Army leadership is committed to bring the terrorists of May 9 to court of law. Recently, the participants of the Formation Commanders’ Conference chaired by Army Chief General Asim Munir have expressed their determination that the time has come to strengthen the grip of the law against the planners and masterminds of May 9. According to the Public Relations Department of Pakistan Army (ISPR), a formation commanders conference was held at General Headquarters (GHQ) under the chairmanship of Army Chief General Asim Munir in which Corps Commanders, Principal Staff Officers and all formation commanders of Pakistan Army were present. The ISPR said that the forum paid great tribute to the great sacrifices of the martyrs and said that the state of Pakistan and the armed forces will always hold the martyrs and their families with respect and dignity. ISPR said that Pakistan Army is determined to fulfill its national responsibilities of protecting territorial integrity. Condemning the Black Day events of May 9 in the strongest possible terms, the Forum reiterated its firm determination that those who attacked the Martyrs’ Memorials, Jinnah House and military installations should be brought to justice under the Pakistan Army Act and the Official Secrets Act. On this occasion, the Army Chief said that the indisputable evidence collected in abundance cannot be denied or distorted, all attempts to create distortions and all attempts to take shelter behind fake human rights violations are futile. He said that with the full cooperation of the nation, all the noble ambitions will be thwarted. The Army Chief said that the people of Pakistan and the armed forces have a close relationship, which is central to national security. The baseless allegations of rights violations and suppression of political activities are aimed at misleading the public, and are aimed at achieving nefarious political interests by maligning the armed forces. The forum emphasized the need to clamp down on those who foster hatred against the state and state institutions and those who spread chaos in the country and resolved that now is the time to strengthen the grip of the law against the plotters and masterminds. According to the ISPR, the forum also decided that efforts to create obstacles in any quarter and to defeat the nefarious intentions of the enemy forces will be dealt with an iron hand. Readers, Election are very costly event and billions of rupees, infrastructure and resources are required to conduct the elections. Is it a wise step to go to elections in such worst economic crises and before punishing the culprits of May 9 (to further encourage them)? Is it a wise step to allow the riots and terrorists to participate in electoral process and come back to parliament? I am leaving these questions to my readers and power hubs of the country to determine the directions and priorities before going into a complex and expensive electoral process.
