Skip to main content

Pakistan: Among the Highest IMF Loan Recipients but with the Lowest Debt-to-GDP Ratio

Pakistan is among the highest recipients of IMF loans. However, it is important to note that Pakistan's IMF debt as a percentage of its GDP is the lowest among comparable countries.

The top three recipients all have larger economies than Pakistan and a debt-to-GDP ratio of more than 3%, whereas Pakistan's ratio is less than 2%.

Debt-to-GDP ratio is a measure used to assess a country's ability to pay back its debt relative to the size of its economy. A lower ratio generally indicates that a country is managing its debt more effectively compared to its economic output.

For a broader meaningful comparison, it is essential to exclude Argentina and Ukraine, as they are special cases due to their unique economic and political circumstances. Additionally, smaller African countries should be left out of the comparison because their economic contexts differ significantly. (IMF data)

This leaves Egypt as the most relevant country for comparison. Egypt, like Pakistan, has a geopolitically strategic location and a large, growing population. Both countries have histories of hybrid or dictatorial regimes, face perennial foreign exchange issues, experience significant income disparity, and have large public sectors. These similarities provide a useful basis for understanding Pakistan's economic situation in relation to other nations that receive substantial IMF assistance.

Additionally, Pakistan's actual GDP may be larger than officially reported. A substantial portion of the economy operates in the informal sector, which is not captured in official statistics. Estimates suggest that the undocumented economy could account for over 35% of Pakistan’s total GDP​ (Informal Economy Accounts for Over 35% of Pakistan’s GDP, NA Informed)​. This unrecorded economic activity implies that the real debt-to-GDP ratio could be even lower, further emphasizing Pakistan's fiscal resilience and potential for sustainable debt management.

See the Frequently Asked Questions on Pakistan (IMF)



Labels:

Popular posts from this blog

 A Snapshot of Exchange Traded Funds at PSX
Read more

Brent Crude Logs Biggest Weekly Drop Since September on Weak Demand, Easing Tensions

Oil prices were under pressure this week. Brent crude oil futures fell 1.9% to $73 per barrel on Friday, registering the biggest weekly loss since early September, with prices dropping over 7%. The decline was attributed to weaker demand forecasts from OPEC and the International Energy Agency (IEA), slowing economic growth in China, and signs of easing geopolitical tensions in the Middle East. Both OPEC and the IEA revised down their demand forecasts for 2024 and 2025. China's refinery output declined for the sixth consecutive month, impacted by weak fuel demand and the growing adoption of electric vehicles (EVs). Meanwhile, U.S. crude oil production reached a new record last week. Although a drawdown in U.S. crude inventories and stronger-than-expected retail sales in September provided some support to oil prices, easing concerns about a broader conflict in the Middle East exerted additional downward pressure on the market.
Read more

PSX Strongly Rebounds

The Pakistan Stock Exchange (PSX) reacted positively to the conclusion of the IMF staff-level agreement and has now recovered a substantial part of the losses sustained on Monday. Today, out of the 1,139-point gain in the KSE-100 Index, around 800 points were contributed by UBL, OGDC, PPL, and Meezan Bank.
Read more