The Asian Development Bank’s report for 2022 said it had given Pakistan heavy loans that year, making it the recipient of the most ADB loans in Asia. Of $31.8 billion lent, $5.5 billion came to Pakistan, which also received $ 2 billion in concessional loans, and $60 million in grants. All that has been achieved, and not just because of these loans, has been to avert default. These loans were conditional on Pakistan obtaining loans from the IMF, which imposed its own conditionalities. One issue has been that loans have not been used to finance projects which could raise revenue and pay off the loans; in recent times, debt is incurred to pay off previous debt. The idea is to keep Pakistan from defaulting, and thus keep open access to foreign money markets. That access is needed to borrow more to meet loan repayments.
One of the most worrisome aspects of the situation is that nobody seems to have a reliable method of resolving the problem. While embezzlement and corruption played a role, it is clear that one reason for incurring the debt was because it could. If multilateral institutions like the IMF and ADB drew back, Pakistan turned to bilateral aid from friendly countries. Now even those countries seem to have grown tired of purring more money into what seems to be a bottomless pit, and have tied aid to the IMF giving its loan.
Perhaps the most overblown idea is that of an Economic Charter between the parties. No doubt there should be one, but none of the parties appear to have a plan to take Pakistan out of its present dilemma. It seems that an Economic Charter involves conservative policies that make Pakistan avoid default, while remaining in the same debt trap. What seems to be needed is for Parliament, which has been so prickly about asserting its supremacy in financial matters, to exercise oversight over all borrowing. Foreign borrowing is treated as a foreign relations issue, and Parliament is patted on the head and told not to bother about it. Even though it will have to shell out vast sums to service that debt. For Parliament to do this, it has to become a hot-button issue among the people who elect Parliament. That is apart from political stability, which involves an end to military interference, and more intra-party democracy, so that Finance Ministers are up to the job rather than being placed in the party leader feels should have the job.