'Pakistan struggling amid worsening foreign exchange crisis'
New Delhi, May 24
Pakistan is grappling with a mounting foreign exchange crisis driven by pressure to repay roughly $4.8 billion of external debt, weak investor confidence, and falling foreign direct investment, according to an international media report.
The report in the Times of Oman stated that foreign direct investment in Pakistan plummeted by 33 per cent in FY26 to $1.195 billion from $1.92 billion in 2023-24 and $1.83 billion in 2024-25. As a share of GDP, FDI remained below 0.45 per cent.
The report highlighted that the declining confidence in the country's economy is also reflected in the exit and downsizing of several multinational companies in recent years. Various policy measures announced by the government to revive investors' confidence have failed to yield results.
The report mentions Procter & Gamble among the multinational giants that have decided to shut down manufacturing operations in Pakistan, along with companies such as Shell, Telenor, Uber, Yamaha, Eni, some foreign banks and pharmaceutical firms deciding to scale down or shut operations in Pakistan.
The report mentioned labour force survey data showing the unemployment rate rising to 6.3 per cent to 6.9 per cent from 2020-21 to 2024-25, with women and youth experiencing the biggest brunt.
Pakistan's external and fiscal vulnerabilities are apparent from public debt surging to Rs 80.52 lakh crore by the end of FY25, while external debt and liabilities stood at $138 billion, the report said. "Economic growth for the last three years has averaged about 1.7 per cent. The government's debt is worth 70 per cent of GDP, and gross financing needs are among the highest in the world," it added.
The report also points out that Pakistan's economy remained highly exposed to West Asian shocks, as the country spends about 4 per cent of GDP annually on fuel and fertiliser imports from the Gulf. Due to heavy reliance on fuel, food, and remittances from West Asia and the Gulf, the economy is under significant strain, with Islamabad ordering austerity measures like the closure of schools and a reduced work week to deal with the oil crisis. it said.
— IANS
Reader Comments
The closure of multinationals like P&G and Shell is a massive red flag. When big companies leave, it signals deep structural problems. Pakistan needs to address policy instability and security concerns to attract FDI again. Otherwise, the debt spiral will just worsen.
Unemployment at 6.9% and youth/women worst hit? That's heartbreaking. Every country should prioritize creating jobs for its young population. Pakistan has so much potential with its youth bulge, but without economic stability, it's a ticking time bomb. 😢
The big lesson here is that no country can survive on loans and aid forever. Pakistan's debt-to-GDP ratio of 70% is alarming. They need to focus on exports, agriculture, and IT services like India did. Wishing them the strength to overcome this crisis. 🤞
Austerity measures like closing schools? That will hurt the next generation. Education should never be the first casualty. I hope Pakistan's leadership rethinks their priorities and invests in human capital even during tough times. The people deserve better planning.
This is a classic case of 'borrowing from Peter to pay Paul'. Pakistan's external vulnerabilities to West Asia shocks show how dependent they are on fuel imports. They need to diversify energy sources and reduce oil dependency. A tough road ahead, but not impossible.
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