An analysis done by the Economic Affairs Division on foreign economic assistance reveals that Pakistan has borrowed around $61 billion from international lenders in the last five and half years. 40% of the borrowing was done from multilateral development partners, which largely consist of three financial institutions: the World Bank, Asian Development Bank, and Islamic Development Bank. When it comes to bilateral aid, Pakistan had its largest borrowing share from China, followed by Saudi Arabia, the USA, the UK and France.

This amount is exorbitant. The government is aware of it and has rightly pointed out many times that our borrowing trends are not feasible. Yet it has been unable to present a solution to our increasing external debt. Such a model of foreign aid cannot be sustained without an increase in Pakistan’s exports. The trend was slightly upwards by the last financial year, when in Jul-Mar FY20, our exports increased from 2.23% to $17.45 billion and imports declined 14.4% to $34.81 billion. This was a nominal increase, certainly not enough to sustain our borrowing model. Now with the pandemic, with manufacturing industries in lockdown, this nominal increase in exports may also be lost, though imports continue to slide due to depressed demand and the global oil price crash.

With the easing of the lockdown restrictions, this is the time for the government to finally devise an effective economic strategy. A plan to decrease reliance on foreign funding must be implemented, and local industry must be boosted. The post-epidemic world economy will be different – we must take advantage where we can. The government’s focus must be on a long-term plan to remove dependence on foreign aid.