ISLAMABAD: The International Monetary Fund (IMF) has termed Pakistan’s heavy interest payments on its debts as a burden on the economy.
Negotiations on a new bailout package between the IMF and Pakistan are underway in Islamabad. The IMF demanded Pakistan to reduce its expenditure and termed the heavy interest payments on Pakistan’s debts as a burden on the economy.
According to the sources of the Ministry of Finance, the interest on loans is expected to go up to 9 thousand 787 billion rupees in the next financial year, while the payment of interest on loans in the current financial year may go up to 8 thousand 371 billion rupees. In the current financial year, compared to the target, there is a fear of 1 thousand 68 billion additional expenses on interest. In this year’s budget, the target of payment of interest on loans was set at 7 thousand 303 billion rupees and only in the first 9 months, interest of 5 thousand 518 billion rupees was paid on internal and external loans.
According to sources, the interest payment on loans was 205 billion rupees more than the net income of the federal government. From July to March, the net income of the federal government was recorded at 5 thousand 313 billion rupees. In the next financial year, the loan ratio will come down to 70% from 72.1%. Extremely high external financing requirements and high interest rates were considered dangerous for debt sustainability.
According to the IMF, debt reduction for Pakistan will depend on the successful continuation of policies.
