Pakistan’s economic situation is increasingly precarious, largely due to its reliance on external financing, which continues to hinder overall stability. Policymakers have highlighted that dependence on foreign loans exposes the nation to ongoing financial crises. Despite a reported uptick in reserves, the structural weaknesses in the repayment framework remain unaddressed, as indicated by local economic analysts. A significant portion of Pakistan’s debt is oriented towards short-term maturities, restricting the government’s capacity to manage economic shocks effectively.
Urgent Call for Debts Extension from Friendly Nations
Raja Waseem Hassan, Vice Chairman of the Pakistan Industrial and Traders Associations Front, has urged authorities to promptly negotiate extensions on repayment timelines with allied nations. He emphasised that without such extensions, the risk of recurrent balance-of-payments crises will persist. Current data reveals that Pakistan’s external debt and liabilities are approximately $134.5 billion as of September 2025, with considerable repayment obligations looming in the near future.
Reserves Show Temporary Improvement Amidst Larger Challenges
Although Pakistan’s reserves surpassed $21 billion in January 2026, analysts have cautioned that a significant portion of this increase is derived from temporary multilateral assistance and bilateral support. The repayment responsibilities that extend into 2026 and beyond are daunting. Hassan noted that recent diplomatic outreach towards Gulf states, discussions of potential investments from Saudi Arabia and the UAE, along with improved relations with the U.S., are positive developments. However, he emphasised that shifting geopolitical relations cannot replace the need for internal economic resilience.
Growth Projections and Economic Inequalities
Hassan underscored that for sustainable stability, Pakistan must focus on improving competitiveness, enhancing productivity, and establishing credible economic buffers. He compared Pakistan’s situation with neighboring economies that have been successful in negotiating favorable terms amid global trade fluctuations. He pointed out that Pakistan’s limited export base and sluggish economic growth have diminished its bargaining power. Exports remained around $32 billion in fiscal year 2025, failing to meet import demands even with recent restrictions.
Concerns Raised by Economic Experts
Senior economist Saleem Ahmed echoed these apprehensions, stressing that relying on loan rollovers and deposits cannot serve as a lasting solution. He advocated for effective management of loan maturities in conjunction with reforms in taxation, energy costs, and industrial production. With economic growth predicted to remain under five percent and tight credit conditions, businesses are exhibiting caution in their operations. Both Hassan and Ahmed called for immediate strategies to expand the tax base, reduce losses in the power sector, promote higher value-added exports, and attract significant foreign investment.
