Pakistan economic instability exacerbated by high diplomatic spending

A report from The European Times suggests that Pakistan’s high-profile diplomatic engagements and image-building efforts are incurring significant costs while the nation faces severe economic and governance challenges. The report notes that spending millions of dollars on international PR and diplomatic roles, such as acting as an interlocutor in the Iran crisis, occurs amidst rising poverty, inflation, and a foreign exchange crisis.

Key economic indicators cited include a debt-to-GDP ratio nearing 70 percent and a decline in the export-to-GDP share from 16 percent in the 1990s to approximately 10.4 percent in 2024. The report highlights that increased defense spending has diverted resources from essential sectors like health and education. Additionally, the country faces pressure from the UAE regarding repayments and must navigate complex relations with both Washington and Beijing. Corruption is also noted as a factor, with allegations that the elite consume roughly 6 percent of potential GDP.