Near Breaking Point
Near Breaking Point: Pakistan recently gained global praise for promoting peace during tensions between the US, Israel, and Iran. At the same time, it faced a serious economic risk. The UAE withdrew $3.5 billion from Pakistan. The country also had to repay a $1.3 billion Eurobond. These pressures reduced Pakistan’s financial reserves. The UAE had earlier promised the IMF to keep its funds longer, but it changed its decision. This showed that foreign support is not always reliable.
Rising Dependence
Saudi Arabia stepped in during the crisis. It offered $3 billion to support Pakistan’s reserves. It also changed the terms of its earlier $5 billion deposit. This increased Pakistan’s total reliance on Saudi Arabia to $8 billion. The move helped avoid an immediate crisis. However, it also showed Pakistan’s growing dependence on other countries.
This situation raises questions about Pakistan’s economic policies and IMF programmes. The government improved its budget balance and reduced the deficit. However, it did this by increasing taxes on ordinary people. At the same time, it increased its own spending. It raised salaries and benefits for officials. These actions contradict claims of austerity.
Weak Growth
Inflation has decreased, but high interest rates remain. These rates make borrowing expensive for businesses. High energy costs add more pressure. These factors discourage investment and slow exports. Pakistan remains stuck in low growth and low investment.
Pakistan achieved a current account surplus. It did this by controlling foreign exchange strictly. These controls forced many foreign companies to leave. The country’s reserves look stable, but most funds come from friendly countries. These countries can withdraw their money at any time.
Debt and Governance
Public debt continues to rise. It now takes up a large part of the economy. The government spends most of its tax revenue on interest payments. Pakistan also faces large loan repayments in the coming years. It borrows new money to repay old loans. This creates a cycle of dependency.
Weak governance and corruption remain major problems. Powerful groups influence policies for their own benefit. Institutions fail to protect public resources. Pakistan has received billions in foreign aid, but it has not improved enough in development.
Need Reforms
Low tax collection, losses from state-owned companies, and energy sector issues waste large amounts of money. Better governance could have reduced the need for foreign assistance.
Pakistan’s economic problems come from poor management and weak institutions. The country needs real reforms to increase growth and exports. It must also reduce unnecessary government spending. Without these changes, Pakistan will remain dependent on external support.
Economic Self-Reliance
Pakistan has shown strength in diplomacy and security. Now it must build a strong and self-reliant economy. Without long-term reforms, the economy will rely on temporary support instead of real stability.
Published in Dawn, 25th April 2026
