EFFECTS OF FOREIGN

DEBT ON PAKISTAN
COMPOSITION OF GROUP
Abida Khatoon Niazi
Sadia rafaqat
Sonia Hameed
Sana Altaf
Raja Zeeshan Zafar
Shahab Sultan
Rao Shahzad Shabbir
Muhammad Murad Ali Khan
Nauman Khalil
Nasir Nazir
WHAT THE TERM DEBT MEANS!

Obligation that a debtor owes to a

creditor.
It involves payment in the form of
money as well as goods and services.

External Debt/ Internal Debt

How Foreign Debt Effects Our…

National Savings
Investments
Economic Growth
Literature Survey

Time-series data for period from 1970

to 2003.
Negative effect on the productivity of
labor and capital,GDP and thereby
affect economic growth
Kemal (2001) explains the debt
accumulation and its implications for
growth and poverty in Pakistan.
Literature Survey

Siddiqui and Malik (2002) estimate

directly the impact of debt on GDP
growth rate and argue that debt
accumulation and growth have a non-
linear relationship: up to a certain
level the impact is positive and
beyond the threshold level the
relationship turns negative.
Theoretical Framework:
Dependent Variable:
Foreign debt
Independent variable:
Value of Currency
Economic Stability
Political Stability
Oil Prices
Independent variable Dependent
Variable
Value of
currency

Economic
stability Foreign
Debts

Political
stability

Oil prices
Hypothesis Testing
Hypothesis 1:
If increase in the value of currency then
decrease foreign debt
Hypothesis 2:
The higher economic stability, the. Lower the
foreign debt
Hypothesis 3:
There is a relationship between oil prices and
foreign debt.
Hypothesis 4:
If increase in political stability then decrease
in foreign debt.
Research Design
Nature of the Research
Purpose of the Study
Type of Investigation
Researcher Interference
Study setting
Unit of Analysis
Time Horizon of study
Conclusion

The main focus of this study is to

analyze the effect of rising debt on
economic growth
Pakistan’s external debt towards the
end of the 1990s reached alarming
proportions, which posed a serious
danger to the economic future of the
country.
Conclusion

There is strong evidence that

governance mechanism for the use
and monitoring of funds generated
through external borrowing needs
much improvement.
Recommendations

First of all, Pakistan should make

stronger efforts to avoid as much
foreign debt as possible.
Political stability and satisfactory law
and order are likewise critical to avoid
Foreign debt.
The country’s political leadership must
take practical steps to improve the law
and order situation particularly
Recommendations

in the major “growth poles” of the

country including Karachi.
Improve the tax collection procedure
so that there is more income
generated inside the country resulting
in less amount of foreign debt.
 Improving the infrastructure of the
country.
Recommendations

Take confidence building measures

to have a strong partnership between
public and private sector.