Foreign Debt and Debt Servicing Relief Effect Implications in Pakistan: A Poverty Reduction Strategy

Abstract

The study interrogates the critical thresh hold limit of the external debt where the highly indebted economy becomes hanged and stagnant, pushes the economy towards. deeper poverty even below the poverty line. The other horizon aspect of relief in debt servicing is attributed to American and Russian war of 80s and war on the terror against Afghanistan after 9/11 forced the debt issuing agencies like Paris and Non-Paris Club and other lending aliened countries rescheduled and cut down debt servicing of Pakistan. This study examined the foreign debt effect on poverty by assuming dataset over the period from 1984 to 2017. The ARDL to co integration Approach was applied to get the findings that after debt thresh hold limit and debt overhang point, the foreign debt causes poverty in case of Pakistan. The other dimension if relief in debt servicing is provided this economic action depressed poverty.