This paper has a two-fold objective: first, to examine the
terms on which Pakistan receives aid and whether its debt situation is
sustainable, and second, to examine the impact of aid and debt on
economic growth. It is found that there is little encouraging that can
be said about how the terms on which Pakistan has received aid over time
have changed, and its current debt situation is not sustainable. Also
reported is the analysis done elsewhere which shows that aid has a
negative (Granger) causal impact on GDP, and aid has a robust negative
impact on economic growth after controlling for supplyside shocks. We
provide various reasons for this negative association.
