FRIA Senior Vice Chairman Warns of Pakistan's Economic Crisis

Pakistan is currently facing a severe economic crisis, as highlighted by the Ferozepur Road Industrial Association (FRIA) Senior Vice Chairman Shahbaz Aslam. The country is grappling with rising inflation, interest rate hikes, and deteriorating debt sustainability indicators. As per Aslam, Pakistan is set to repay $77.5 billion in external debt over the next three years, with a significant portion owed to China.

The total public debt and liabilities have surged to Rs68 trillion in FY22-23, with projections indicating a further increase of Rs11.8 trillion in the current fiscal year. The fiscal deficit is expected to rise by Rs8.227 trillion, equivalent to 7.8 percent of GDP, necessitating substantial budget financing through domestic sources.

Amidst these challenges, the government has maintained subsidies at Rs1.39 trillion and defense spending at Rs1.8 trillion for the current fiscal year. Development spending at federal and provincial levels has been slashed, with the Federal Board of Revenue (FBR) targeting Rs9.415 trillion in revenue collection.

Furthermore, Pakistan's external debt as a percentage of total public debt has increased, heightening currency risks. The country's total public debt stood at $233 billion by December, including $86.6 billion in external public debt.

The economic landscape in Pakistan is fraught with challenges, including mounting debt obligations, rising fiscal deficits, and reduced development spending. Addressing these issues will require strategic financial management and potentially tough decisions to ensure economic stability and growth in the long run.