Which Country is a Bigger Beggar? India or Pakistan?
Most countries in the world today borrow money from various sources to finance their budget deficits. So do India and Pakistan. So why is it that only Pakistan's borrowing money gets labeled "begging"? Is it not begging when India borrows a lot more money than does Pakistan? Or is it that only borrowing money from the IMF qualifies as "begging"? Let's look into this double standard. Currently, India's public debt to GDP ratio is 80% while Pakistan's is about 74%. India's private debt to GDP ratio is 17%, twice that of Pakistan. Do these figures mean that India is a bigger beggar than Pakistan?
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| Debt-to-GDP Ratios Around the World. Source: Visual Capitalist |
India is consistently among the largest borrowers from International Financial Institutions (IFIs), particularly the World Bank and the Asian Development Bank (ADB). It has been the top debtor to the World Bank for several years and a major borrower from the ADB. India’s outstanding loan balance with the World Bank is almost double that of the next biggest debtor, Indonesia, which owed the bank $22.2 billion. Pakistan and Bangladesh followed with just short of $20 billion and $19.8 billion, respectively. India is also the largest borrower from the Asian Development Bank (ADB). Since 1986, when ADB began lending to India, it has approved many loans, grants, and technical assistance totaling $55.3 billion.
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| Top Debtors to World Bank 2025. Source: Visual Nerd |
One key difference between the two South Asian neighbors is the frequency with which Pakistan has been borrowing from the International Monetary Fund, known as the lender of last resort. Pakistani economic managers have had a poor track record of managing hard currency reserves that the country needs to import what it lacks. Pakistani exports have failed to keep pace with its rising imports. This situation creates a crisis situation every few years and it forces the country to ask the IMF to lend its US dollars. Currently, Pakistan ($6.3 billion) is IMF's 5th highest debtor after Argentina ($31.1 billion), Ukraine ($10.19 billion), Egypt ($8.6 billion) and Ecuador ($6.6 billion). The only saving grace is the rapid growth in remittances from the Pakistani diaspora. In the last fiscal year that ended in June, 2025, overseas Pakistanis sent home $38.3 billion, representing 27% growth from the prior fiscal year. It helped Pakistan achieve a current account surplus of $2.1 billion, compared to a current account deficit of $2.1 billion in the previous fiscal year.
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| Top IMF Debtor Nations. Source: IntelPoint |
Pakistan's average economic growth of 5% a year has been faster than the global average since the 1960s, it has been slower than that of its peers in East Asia. It has essentially been constrained by Pakistan's recurring balance of payment (BOP) crises as explained by Thirlwall's Law. Pakistan has been forced to seek IMF bailouts 14 times in the last 75 years to deal with its BOP crises. This has happened in spite of the fact that remittances from overseas Pakistanis have grown 38X since 2000. Every time Pakistan has faced a balance of payments crisis, the result has been massive currency devaluation, high inflation and slower growth for a period of multiple years. The best way for Pakistan to accelerate its growth beyond 5% is to boost its exports by investing in export-oriented industries, and by incentivizing higher savings and investments.
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https://www.reuters.com/markets/asia/sp-global-lifts-pakistans-credit-rating-b-ccc-outlook-stable-2025-07-24/
LONDON, July 24 (Reuters) - S&P Global raised Pakistan's sovereign credit rating to 'B-' from 'CCC+' and placed it on a 'stable' outlook on Thursday, saying the country's finances and reserves had been stabilised by International Monetary Fund support.
"The stable outlook reflects our expectations that continued economic recovery and government efforts to enhance revenue will stabilize fiscal and debt metrics," ratings agency S&P said in a statement on the move.
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https://www.dawn.com/news/1926320
Ratings agency S&P Global raised Pakistan’s sovereign credit rating to ‘B-’ from ‘CCC+’ and placed it on a ‘stable’ outlook on Thursday, saying the country’s finances and reserves had been stabilised by International Monetary Fund (IMF) support.
“The stable outlook reflects our expectations that continued economic recovery and government efforts to enhance revenue will stabilise fiscal and debt metrics,” S&P said in a statement on the move.
“We also expect that sustained official financing will support Pakistan in meeting its external obligations, and that the country will continue to roll over its commercial credit lines over the next 12 months.”
Pakistan’s longer-dated international bonds rallied after the upgrade, with the 2051 maturity gaining 1.6 cents to be bid at 84.85 cents on the dollar, according to Tradeweb data.
The 2031 and 2036 maturities also gained around 1 cent, while shorter-dated maturities posted smaller gains.
Last week, Finance Minister Muhammad Aurangzeb urgedthe leading US rating agency — Moody’s — to improve Pakistan’s credit rating and help its return to international capital markets at favourable conditions.
Moody’s had upgraded Pakistan’s credit rating by one notch in August 2024 to Caa2 from Caa3 (downgraded in February 2023 due to suspension of the IMF programme) and changed its outlook to positive from stable for improving macroeconomic conditions, including liquidity and external position from very weak levels.
Global ratings agency Fitch had upgraded Pakistan’s foreign currency credit rating to ‘B-’ from ‘CCC+’ in April, citing increased confidence in the country’s progress on narrowing its budget deficits.