Index of Freedom from‘Fear’ Table 6.1: Trend in Index of Territorial Security 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 1. Total Defence Expenditure as% of GDP Index 0.428 0.428 0.314 0.400 0.543 0.600 2. Real Defence Expenditure per Capita(Rs, at 2005-06 prices) Index 0.218 0.335 0.342 0.418 0.594 0.642 3.% of Defence Expenditure financed by Federal Net Revenues after Debt Servicing Index 1.000* 1.000* 0.814 1.000* 0.719 0.186 4. The ratio of Defence Expenditure to health and education expenditure Index 0.334 0.569 0.683 0.822 0.810 0.751 OVERALL INDEX 0.420 0.534 0.494 0.608 0.658 0.481 *Restricted to 1.000 Latest Year 0.343 0.462 0.120 0.830 0.354 6.2 External Financial Vulnerability Pakistan finds itself very close to a default position because of very low foreign exchange reserves in the presence of large external financing requirements for external debt repayments and for financing the current account deficit in the balance of payments. The level of external debt as of end-December 2022 stands at$126 billion, equivalent to 39% of the GDP. It has risen sharply from less than 25% of the GDP in 2015-16, as shown in Chart 6.2. Perhaps even more worrying is that currently, the import cover by foreign exchange reserves is only one month. Chart 6.2: Indicators of Financial Vulnerability: Level of External Debt as% of GDP and Foreign Exchange Cover of Imports(in months) 37