THE foreign debt has remained on an upward trajectory, posing serious questions regarding our financial independence and sovereignty. Currently, the foreign debt-to-GDP ratio stands at 43 per cent compared to 21pc of Bangladesh which also holds foreign exchange reserves of $44 billion compared to Pakistan’s $24 billion.

Several months ago, a proposal was submitted to the government, recommending the setting up of a Pakistan Sovereign Wealth Fund (PSWF) through a process of mobilising national revenues and resources. The proposal set out practical steps and viable policy decisions which will lead to the creation of sufficient financial resources that can be used by the government to meet its trade and current account deficits and other foreign exchange needs. This will eventually end our dependence on borrowing from foreign financial institutions.

The proposal was followed by an appeal signed by eminent businessmen and members of the civil society to the government in this regard. However, nothing has happened on that front.

We need to realise that our foreign exchange reserves mainly comprise borrowed money raised through instruments of repayable debt, like Eurobond, Federal Investment Bonds and loans from international financial institutions.

We are caught into a vicious cycle of borrowing money to service our existing foreign debt. If we don’t change course, the foreign debt will continue on its upward journey.

Time has come to acknowledge the gravity of the situation and plan accordingly to save our future generations from the burden of this ever increasing burden of debt.

Jawed H. Siddiqui
Karachi

Published in Dawn, September 10th, 2021