Abstract:

The focus of this research is in the area of Financing / Loans acquired by Pakistan over the decades. Such a study is important in order to forecast the future of Pakistan’s financial strength. The research approach adopted in this study includes the collection of data from State Bank of Pakistan from 1949 to 2010. The findings from this research provide evidence that the external debts are growing at a fast rate, which will create a great hurdle in coming future for Pakistan. The main conclusions drawn through this research is that the external debts are growing at an average of 14.40 % per year and also show that if External debts increase by PKR 1 million in a year, in the next year it will increase by PKR 1.155 million. This research recommends that the outstanding debt can still be taken care of if proper fiscal and monetary policies are made in which external debt repayment is given high importance along with the strict control over corruption. Government must make easy trade policies, which may boost the exports to generate balance of trade, which may help in repaying the external debts.