The Minister of Finance just recently declared us IMF free and presented the economy in rosy terms. The truth is a little darker, however. IMFs exit, just meant the end of one programme, and this fact in no way certifies that our economy is out of trouble.

The repayment of US $12.2 billion debt rescheduled by the Paris Club till September 2017 will create serious balance of payment issues in the election year budget of 2017-18. Paris Club creditors agreed on January 23, 2001 with the Government of Pakistan to a restructuring of its public external debt. Paris Club creditors provide debt treatments to debtor countries in the form of rescheduling, or in the case of concessional rescheduling, reduction in debt service obligations during a defined period.

With the Paris Club countries knocking at our door for money, we may be IMF free but our national debt is still massive. This means that every year, we lose what could be spent on health, education, infrastructure and job creation, on the payment of debt. The volume of country’s debts has reached Rs 1,340.30 billion out of which Rs 58.34 billion are foreign debts up till the end of May this year. This fact was transmitted to the Senate during question hour on Tuesday. The government took a loan of Rs 15.89 billion during fiscal year 2016-17 whereas Rs 9.74 billion would be taken in next two years as debt.

What is pulling our economy through is remittances. Workers abroad are the only help in decreasing the gap between our expenditures and revenues every year. This is something that is a blessing in disguise but cannot be relied on. Our workers abroad are already feeling the crunch due to the contraction of markets in the Gulf as well as the construction sector in Saudi Arabia not paying workers or renewing their visas. Remittances may not be sufficient to meet our debt obligations in 2017-18 when the Paris Club repayments become due. Sources further added that as repayment to Paris Club consortium approaches along with other repayments, including expensive loans taken through issuance of Eurobonds/Sukuk/foreign commercial borrowing, the country would face serious repayment challenges unless exports can be fuelled. We are still a country in chains when it comes to freedom from debt.