Skip to content
Search

Latest Stories

Cash-strapped Pak may face serious economic crisis amid fast-depleting forex reserves

State Bank of Pakistan’s foreign exchange reserves fell to single digits despite a USD 2.3 billion inflow from China late last month.

Cash-strapped Pak may face serious economic crisis amid fast-depleting forex reserves

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 USD 10.886 billion in the first three quarters of 2021-22 compared to USD 13.38 billion in the entire FY21. It was just USD 1.653 billion in 1QFY22 against USD 3.51 billion in the first quarter of 2020-21, but it jumped to USD 4.357 billion in 2QFY22 and to USD 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 USD 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.

The current coalition government led by Pakistan Muslim League-Nawaz (PML-N) did not disclose the rate at which it had borrowed USD 2.3 billion from China.

Initially, Beijing had agreed to roll over the syndicated loans before the ouster of the previous PTI government. However, Prime Minister Shehbaz Sharif's administration had to wait for two months to secure the Chinese loan.

The financial sector and other stakeholders of the economy are still not satisfied with the hidden cost of the Chinese loan. The market is full of speculation that Chinese loans were taken at a very high rate.

Finance Minister Miftah Ismail has been assuring Pakistanis that the release of the USD 1 billion tranches is expected in a few days but three months have gone without a satisfactory reply from the IMF. Bankers believe that the fund is dictating the government like Washington to do more., the report said.

Since the IMF has stopped funding, the country is not getting project funding from the World Bank and Asian Development Bank.

A senior analyst said the Chinese knew that Pakistan was unable to return to the international debt market and the IMF was not in a hurry to help Islamabad. This was the reason that the Chinese lent money at a very high rate.

Pakistan has been forced to pay debt servicing through commercial borrowing, which means more external debt in the next financial year.

The governments in FY22 that ended on June 30 could not control the influx of huge imports totalling USD 80 billion creating a large current account deficit (CAD), which alone is enough to understand the external weakness of the economy.

Despite record remittances and exports, the country is unable to get dollars from the international debt market, the report said.

Cash-starved Pakistan has faced growing economic challenges, with high inflation, sliding forex reserves, a widening current account deficit and a depreciating currency.

(PTI)

More For You

Starmer faces revolt as welfare bill vote sparks Labour uproar

Keir Starmer speaks during a reception for public sector workers at 10 Downing Street in London on July 1, 2025. (Photo by CARL COURT/POOL/AFP via Getty Images)

Starmer faces revolt as welfare bill vote sparks Labour uproar

PRIME MINISTER Keir Starmer faced the most serious test of his leadership on Tuesday (1) as his government’s flagship welfare reforms came under fierce attack from within his own party.

The day was marked by emotional speeches, last-minute concessions, and a deep sense of division among Labour MPs, many of whom said the proposed changes would push vulnerable people into poverty

Keep ReadingShow less
Lucy Letby

Letby, from Hereford in western England, was charged in 2020 after a series of deaths in the hospital's neo-natal unit.

Three senior hospital staff arrested in Lucy Letby case probe

POLICE on Tuesday said they had arrested three senior staff members at the hospital where nurse Lucy Letby was found guilty of murdering seven babies. The arrests were made on suspicion of gross negligence manslaughter.

The investigation was launched in 2023 at the Countess of Chester Hospital (CoCH) in northwest England, following Letby’s conviction and life sentence for killings that took place between 2015 and 2016.

Keep ReadingShow less
food-delivery-getty

Uber Eats and Deliveroo will tighten ID checks, including facial verification, to curb illegal migrant work after UK government pressure. (Photo: Getty Images)

Getty Images

Food delivery platforms to step up ID checks after migrant work abuse reports

FOOD delivery companies Deliveroo, Uber Eats and Just Eat have agreed to strengthen security measures, including facial verification checks, to prevent irregular migrants from working through their platforms, following criticism from the UK government.

The announcement came after the Labour government summoned the three firms for a meeting in response to a report by The Sun which exposed how some migrants were bypassing rules and working illegally in the gig economy sector.

Keep ReadingShow less
David Joseph

Joseph has chaired several BRIT Awards shows and was an executive producer of the Oscar and BAFTA-winning 2015 documentary Amy.

David Joseph named new CEO of the RSA

THE ROYAL SOCIETY OF ARTS (RSA) has announced the appointment of David Joseph CBE as its next chief executive officer. He will take over the role in September, succeeding Andy Haldane.

Joseph previously served as chairman and CEO of Universal Music UK for 17 years. During his time at the company, he oversaw its transformation into a global exporter of British music and worked with several major international artists.

Keep ReadingShow less
Labour Rift Deepens as MPs Prepare for Crucial Welfare Bill Vote

People take part in a protest against disability welfare cuts on June 30, 2025 in London. (Photo: Getty Images)

Getty Images

MPs to vote on welfare bill amid Labour divisions

DOZENS of Labour MPs are expected to vote against the government’s welfare reforms despite recent concessions aimed at easing opposition.

The government had initially planned to tighten eligibility for Personal Independence Payment (Pip) but later said the stricter rules would only apply to new claimants from November 2025.

Keep ReadingShow less