Prime Minister Shehbaz Sharif said that it was embarrassing for him to seek more loans from friendly countries, but he was helpless due to the country’s worsening economic crisis.
He also stated that asking for aid was not a permanent solution for the cash-strapped country’s economic challenges.
Sharif gave the statement days after the United Arab Emirates agreed to roll over $2 billion owed by Pakistan and provide the country with an extra loan of $1 billion as it struggles to recover from devastating floods this summer and a grave economic crisis.
Sharif said that it really embarrassed him to ask for further loans while praising Saudi Arabia for the financial support.
— ABP News (@ABPNews) January 16, 2023
Addressing an event in the capital of Punjab province on Saturday, Prime Minister Sharif said that several governments in the past 75 years, whether led by political leadership or military dictators, could not address the economic issues of the country.
He said that seeking foreign loans was not the right solution to address Pakistan’s economic challenges as the loans would have to be eventually returned.
Pakistan is in the middle of a severe economic crisis, with extremely high inflation, dangerously low foreign exchange reserves, and global lenders such as the International Monetary Fund (IMF) reluctant to disburse more funding.
According to PTI, the country is facing a serious crisis as its foreign reserves are down to $5.8 billion, the lowest since February 2014. The reserve includes deposits worth $5 billion from Saudi Arabia and China with specific conditions of use.
With an economy of Rs 350 billion, the country desperately needs external aid to decrease its current account deficit and secure sufficient reserves to meet its debt obligations.
In its call for funds at the recent International Conference on Climate Resilient Pakistan in Geneva, the country was able to secure pledges worth over USD 10 billion — most of them loans.
The country is also facing the worst food crisis in many years, with local media reports indicating that there is an acute shortage of wheat flour in many parts of the country.
In December last year, Pakistan’s inflation rate hit 24.5 percent due to a significant increase in the prices of food products.
(With inputs from agencies)