The IMF has asked Pakistan to cut costs.
The International Monetary Fund has termed the heavy interest payments on Pakistan’s debts as a burden on the economy and said that the reduction of Pakistan’s debts will depend on the continuity of policies.
In the next fiscal year, the interest on loans is expected to go up to 9,787 billion rupees. Negotiations are ongoing between the IMF and Pakistan on a new bailout package in Islamabad.
The IMF demanded Pakistan to reduce its expenditure and termed the heavy interest payments on Pakistan’s debts as a burden on the economy.
According to the sources of the Ministry of Finance, the interest on loans is expected to go up to 9 thousand 787 billion rupees in the next financial year, while the interest payment on loans can go up to 8 thousand 371 billion rupees in the current financial year.
1 thousand 68 billion additional expenditure on interest compared to the target is feared in this fiscal year, the target of interest payment on loans was set at 7 thousand 303 billion rupees in the budget this year and 5 thousand rupees on internal and external loans in the first 9 months only. 518 billion rupees interest was paid.
The interest payment on loans was 205 billion rupees more than the net income of the federal government. From July to March, the net income of the federal government was recorded at 5 thousand 313 billion rupees. In the next financial year, the loan ratio will come down to 70% from 72.1%.
Extremely high external financing requirements and high interest rates were considered dangerous for debt sustainability. According to the IMF, debt reduction for Pakistan will depend on the successful continuation of policies.
