Pakistan allocates 40% of budget to tackle debt

Pakistan’s new government, grappling with soaring inflation and political unrest, unveiled a 9.5 trillion rupee ($47 billion) budget Friday, earmarking more than 40 percent to service the country’s massive foreign and domestic debt.

Prime Minister Shehbaz Sharif blames Pakistan’s economic woes on his predecessor Imran Khan, who was ousted by a parliamentary vote of no confidence in April and is fomenting a national campaign to press for early elections.

Analysts, however, say the problems stem from decades of poor economic management by successive governments and military rulers who have failed to tackle endemic corruption and widespread tax avoidance.

The budget unveiled by Finance Minister Miftah Ismail Friday earmarks 3.95 trillion rupees just to service the country’s whopping debt of $128 billion.

“Because of the lack of farsightedness of (the previous government), social structure was destroyed, economic growth stalled, and national integration withered,” he told the national assembly.

A $6 billion IMF bailout package signed by former prime minister Khan in 2019 has never been fully implemented because his government reneged on agreements to cut or end some subsidies and to improve revenue and tax collection.

Islamabad has so far received $3 billion, with the programme due to end later this year.

Officials are seeking an extension to the programme through to June 2023, as well as the release of the next tranche of $1 billion.

Sharif has vowed to jumpstart the moribund economy, but analysts say his fragile government has failed to take tough decisions.

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