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A Qualitative Analysis of Pakistan’s External and Internal Debt


  • Eatzaz Ahmad

    () (Quaid-i-Azam University,Islamabad, Pakistan.)


This paper discusses how poor debt management combined with the policies of donor agencies (particularly the IMF) have brought on the present domestic and foreign debt crises. The paper presents a qualitative account of the debt in Pakistan and then analyzes the debt data using various debt burden indicators. After the analysis of the economic and social costs of debt overhang in Pakistan, it is found that net foreign resource flows to the private and public sectors tended to crowd out private and public savings respectively and that public savings is crowded out by resource flows from the private sector to the public sector. Finally, the results of the paper find that the resource allocation between development and non-development expenditure did not depend on whether government expenditure was financed by revenues or government borrowing and that more resources are directed towards deveopment activity when government expenditure is financed by foreign resource flows rather than domestice resource flows.

Suggested Citation

  • Eatzaz Ahmad, 2011. "A Qualitative Analysis of Pakistan’s External and Internal Debt," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 16(Special E), pages 123-157, September.
  • Handle: RePEc:lje:journl:v:16:y:2011:i:sp:p:123-157

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    References listed on IDEAS

    1. Catherine Pattillo & Hélène Poirson & Luca Antonio Ricci, 2011. "External Debt and Growth," Review of Economics and Institutions, Università di Perugia, vol. 2(3).
    2. Nadeem A. Burney, 1988. "Determinants of Debt Problem in Pakistan and its Debt-servicing Capacity," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 27(4), pages 805-818.
    3. Eatzaz Ahmad & Ayaz Ahmed, 1998. "A Simulation Analysis of the Debt Problem in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(4), pages 355-376.
    4. Cohen, Daniel, 1988. "The Management of the Developing Countries' Debt: Guidelines and Applications to Brazil," World Bank Economic Review, World Bank Group, vol. 2(1), pages 77-103, January.
    5. M. Aslam Chaudhary, 1988. "International Debt and Foreign Dependency:Policy Options for Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 27(4), pages 829-836.
    6. Eatzaz Ahmad, 1996. "Capital Inflows and National Debt," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 35(4), pages 943-960.
    7. Helene Poirson Ward & Luca A Ricci & Catherine A Pattillo, 2004. "What Are the Channels Through Which External Debt Affects Growth?," IMF Working Papers 04/15, International Monetary Fund.
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    1. repec:lje:journl:v:22:y:2017:i:sp:p:25-51 is not listed on IDEAS

    More about this item


    Debt Burden; Savings; Development Expenditure; Pakistan.;

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt


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