Global economic changes and the increase in interest rates by the US Federal Reserve are directly affecting Pakistan’s external payments. According to a recent statement by the Ministry of Finance, when the US Federal Reserve raised its interest rate to a record high of 5.50 percent, it made debt servicing difficult for all emerging economies, including Pakistan. Despite this, Pakistan is paying an average interest of 4 percent on its external debts, which is a better position than many other countries.
The statement mentions this difficult time when Pakistan’s foreign exchange reserves had fallen to a dangerous level. According to the ministry, during 2022-23, reserves were so low that they were barely enough to cover one month of imports. IMF programs and multilateral funding played a key role in overcoming this crisis. Now the government is implementing a comprehensive strategy to further strengthen these reserves and manage the debt burden.
A government spokesperson says that economic stability is now our top priority. We are not only paying off old loans and interest but are also looking at managing new loans in such a way that the burden on the country’s economy is minimal. The Finance Ministry has appealed to the public and experts to rely only on official figures and avoid misleading reports that create economic uncertainty.