‘Repaying personal debt always important issue for families’

Islamabad : Dr Ali Kemal, former Economic Policy Advisor, Federal SDGs Unit, Planning Commission, has said that repaying debt in Pakistan always was a pertinent issue for families.

Dr Kemal was addressing a webinar and launch of a study ‘Household debt and indebtedness in Pakistan: estimates and implications’ organised by Sustainable Development Policy Institute (SDPI) in collaboration with Sustainable Energy and Economic Development (SEED) here Tuesday.

Dr Kemal observed that a higher incidence of borrowing in Khyber-Pakhtunkhwa indicated in the report may suggest a better social capital in the province. He said that in view of the relationship between poverty and indebtedness in the country, a detailed study on the issue is the need of the hour for evidence-based policies.

Earlier, Dr Sajid Amin from SDPI shared his research with the participants on household debt and indebtedness for Pakistan over the last two decades and discussed their implications for people and the economy. He explained that in Pakistan literature on household debt and indebtedness is nonexisting and thus, there is no data on the size of household of debt and indebtedness.

While presenting the findings of his study, he informed the audience that one-fifth of household in Pakistan were in debt

in 2018-19. He added further that in Khyber Pakhtunkhwa, more than half population was under debt. The poorest 20% of society borrow 2.45 times more than the richest 20% whereas the annual size of household debt in Pakistan over the last 20 years increased more than nine times, from Rs 62 billion in 1988 to Rs601 billion in 2018.

He said that the total stock of household debt in 2018-19 was Rs1162 billion of which about 85% to 95% was borrowed from the informal sector. He suggested that SBP must integrate data on household indebtedness into its database and that the financial inclusion strategy of the bank must introduce debt literacy to promote responsible borrowing.