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Determinants of Debt Problem in Pakistan and its Debt-servicing Capacity

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  • NADEEM A. BURNEY

    (Pakistan Institute of Development Economics, Islamabad.)

Abstract

In the last decade, Pakistan's external debt obligations have risen to an unprecedented level. T~s is despite the fact that the country had been able to borrow on concessional terms from international organizations and foreign governments unlike many other developing countries. The situation has raised concern about the viability of the strategy of excessivedependence on foreign sources and the problems it poses for sustainable growth. Between 1970 and 1980 Pakistan's external debt grew at an average rate of 11.3 percent. Altho!Jgh, during the Eighties it has grown at a much slower rate, Le. 2.37 percent, but by 1986-87 the level of total external debt had reached more than 12 billion U.S. dollars. A notable feature of this change has been that since the mid,Seventies the debt-service payments have increased at a much faster rate compared with the outstanding debt. This paper makes an attempt to analyse changes in the levels of Pakistan's external indebtedness. Various debt-burden and debt-service indicators will be examined to highlight features of Pakistan's external debt obligations. In Section III variations in debt indicators will be related to various factors, e.g. terms of borrowings, external shocks and economic performance. Section N will evaluate the long-run debt-servicingcapacity. Finally Section V summarises the findings.

Suggested Citation

  • Nadeem A. Burney, 1988. "Determinants of Debt Problem in Pakistan and its Debt-servicing Capacity," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 27(4), pages 805-818.
  • Handle: RePEc:pid:journl:v:27:y:1988:i:4:p:805-818
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    Cited by:

    1. Khurram Ejaz Chandia & Sania Riaz & Attiya Y. Javid & Muhammad Badar Iqbal & Mariam Azam & Ifra Gul, 2019. "Assessment of Public and External Debt Sustainability Using Debt Dynamics Equation Approach: A Comparative Study of Pakistan and India," Millennial Asia, , vol. 10(1), pages 25-55, April.
    2. Sabina Khurram Jafri, 2008. "External Debt Sustainability Analysis for Pakistan: Outlook for the Medium Term," SBP Working Paper Series 27, State Bank of Pakistan, Research Department.
    3. Khansa Zaman & Muhammad Saeed Rana & Umer Iftikhar, 2019. "A Multilevel Analysis of Job Demands and Intention to Resign Through Perceived Service Recovery Performance," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 11(2), pages 67-82, June.
    4. Eatzaz Ahmad, 2011. "A Qualitative Analysis of Pakistan’s External and Internal Debt," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 16(Special E), pages 123-157, September.
    5. Eatzaz Ahmad & Ayaz Ahmed, 1998. "A Simulation Analysis of the Debt Problem in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(4), pages 355-376.
    6. Muhammad Jalib Sikandar & Fazale Wahid, 2019. "Debt and Economic Growth of Pakistan; Role of Uncertain Economic and Political Conditions," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 11(2), pages 83-106, June.

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