Former prime minister and Pakistan Tehreek-e-Insaf Chairman Imran Khan has said that Pakistan will struggle to break out of a cycle of debilitating debt repayments without reform, asserting his party will prioritize domestic reforms over seeking debt relief.
In an interview with the Financial Times published today, the former premier ruled out a default if his party returned to power, saying it would prioritize domestic reforms over seeking debt relief.
“Is the answer getting more loans, or is the answer to restructure the way we run the country?” he was quoted as saying by FT. “We have to conduct surgery in Pakistan in the way we run our government.
“Whatever we do, when we look ahead, the debt is growing, our economy is slowly shrinking. From my party’s point of view, we’ve started thinking that we’re stuck,” he stated.
The former PM claims that his team is working on a plan to change the nation if he were to retake office. The plan will prioritize domestic spending and loan repayments.
“We’re sitting with our economists [on] how to come up with a plan with which we can sit with the IMF and give them a viable way of being able to pay our debts,” he said “But at the same time, our economy should not be choked so that our ability to pay debt goes down.”
This week, the advocacy group Debt Justice issued a warning that the cost of servicing debt for developing nations would rise to its highest level in 25 years. According to the organization, Pakistan is expected to repay its foreign public loans at a rate that will account for 47% of its 2023 tax receipts.
“It’s not just Pakistan,” Khan remarked. “How are you going to pay your debts once you start borrowing in dollars and have to service your debt in dollars if your dollar income doesn’t improve or increase?”
He believed that in order for Pakistan to be able to pay its obligations, it needed to boost its dollar income through exports.
