The problem for recovering Pakistan's economy..!?

Pakistan is one of the countries facing the most financial crisis. However, Pakistan's economy has made tremendous progress. In the last two years, inflation has come down from 38% to 1.5%, and Pakistan's stock market has risen by 84% last year, which is seen as an important indicator of the country's economic growth. Due to this, even foreign investors have started looking at the Pakistani market as a safe and profitable investment platform. But, the main problem is that although the Pakistani economy seems to be on a growth path, the country's wealthy elite are reluctant to invest in its future. This is seen as a major obstacle to sustainable growth. However, Pakistan's economy is largely dependent on consumption. This accounts for 80-85% of the economy. This may temporarily stimulate growth, but sustainable and real growth will only come from investment. But Pakistan's investment ratio is just 13% of its GDP, which is a major obstacle to sustainable growth. Since the same ratio is 33% in india, there is a huge difference in growth rates between india and Pakistan.
Moreover, a major obstacle to Pakistan's growth is its massive debt burden. pakistan will need $146 billion (about ₹12 lakh crore) in foreign funds by 2029. That is since pakistan has been in debt for the past several decades, 60% of the government budget is spent on paying interest. The remaining 40% is used to meet current expenses. This goes to parliament, defense, administration, and running government works. Moreover, a large part of the investments go into real estate and speculative assets, but this does not create employment, increase exports, or promote real economic growth. Therefore, the question is whether pakistan can escape this investment trap. That is, although Pakistan's economy has potential for growth, it needs to get out of the investment trap if it is to achieve sustainable growth. However, it is said that there are various challenges. pakistan repeatedly borrows from organizations like the IMF (International Monetary Fund) and the World Bank. Due to the inability to repay the debt, it accepts new loans with more conditions. That is, pakistan joined the international Monetary Fund (IMF) in 1950. Since then, it has requested debt relief (Debt Bailout) 25 times.
 
 Netizens who are burning the fire need new loans to repay previous loans. Since the country's income is low, there is not enough money for infrastructure development. Most of the revenue goes to paying interest on loans, not to spending on important sectors like transport, education, and healthcare. There is no large-scale foreign investment, which is an obstacle to economic growth. In addition, pakistan signed a 10-year loan agreement with the World bank in 2024 worth $20 billion. Moreover, loans provided by international organizations like the World bank and the IMF do not come free of charge. They come with strict conditions and restrictions. Moreover, due to the lack of important investments, the country's income has not grown. As a result, pakistan is stuck in a debt cycle without new growth opportunities. Pakistan's inflation, which was at a dangerous level of 38% two years ago, has now come down to just 1.5%. Pakistan's stock market has risen by 84% in the past year, which has boosted investor confidence. However, foreign investors have started buying Pakistan's short-term debt, which has seen some improvement in the country's financial situation. Even though inflation has come down in pakistan, the stock market has risen, and foreign investment has started flowing back in, the country's rich are not getting involved. What is hindering Pakistan's economic growth? The major hindrance to Pakistan's growth is its massive debt burden. What is the difference between india and pakistan in terms of growth rate? Pakistan's investment ratio to GDP is just At only 13%, which is a major obstacle to sustainable growth. The same rate is 33% in india, which is a huge difference in growth rates between india and Pakistan.
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Sowmiya Sriram

21/03/2025 09:22 AM