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People in the Middle East are drowning in debt. And they are seeking therapy

Peer pressure and impractical lifestyle goals are driving loan-induced financial stress

People in the Middle East are drowning in debt. And they are seeking therapy
[Source photo: Anvita Gupta/Fast Company Middle East]

Twenty-six-year-old Mona Ahmed has a decent job, a supportive family, and friends. Her life is clouded by one thing: loan debt. She owes almost $100,000. Her monthly payment is a huge amount for her. “Fortunately, my mother has been helping me pay some of the balance, but her assistance isn’t permanent or guaranteed. As a result of my debt, I’ve been having anxiety, self-esteem issues, and panic attacks.”

In the Middle East, most people live on borrowed money, and the toll is taking on indebted borrowers. Credit is growing, bad loans are in lockstep, incomes are under pressure, and savings are falling. 

People in the Middle East are already some of the most indebted people in the world. Last June, Saudi Arabia’s household debt accounted for 11.5 % of the country’s nominal GDP, which is about $125 billion. In April, UAE household debt reached $457.5 billion. Data shows a similar situation in all the countries in the region.

The General Authority for Statistics in Saudi Arabia conducts a Household Income and Expenditure Survey every five years. The 2018 survey revealed a household saving rate of 1.6%—one of the lowest among G20 countries.


While much of this debt is generated by the car and housing market, the situation is more complicated. Many are weighed down by various personal credit arrangements – credit cards, outstanding bills, and fines.

“The increasing accessibility of loans in the Middle East has undoubtedly opened doors for many to fall into a debt trap,” says Bas Kooijman, CEO and asset manager of DHF Capital S.A. “Financing homes, cars, and even personal pursuits like vacations has never been easier.”

With financial institutions and online lending platforms offering more accessible access to credit, many individuals are tempted to borrow beyond their means, accumulating debt.

“A primary issue is the trend of financial institutions granting loans to ineligible borrowers, often driven by the pressure to meet sales targets,” says Jigar Sagar, a serial entrepreneur.  

“This practice leads many individuals to debt situations they are ill-equipped to handle. When these individuals are offered loans, primarily due to institutions prioritizing sales quotas over borrower suitability, the risk of default increases. This not only jeopardizes the financial health of the borrowers but also poses broader risks to the financial system’s stability. The crux of the problem lies in the need for more responsible lending practices,” adds Sagar.

Mental health troubles arising out of debt are a severe problem. Psychiatrists, therapists, and online mental health service providers are witnessing this trend in the region.


Taking us inside this mental health affliction, Maham Rasheed, a clinical psychologist at Nabta Healthcare, says that while specific data on finances-induced mental health issues in the Middle East are not readily available, “financial strain is significantly contributing to mental health challenges. It is a potential stressor, amplifying pre-existing conditions or inciting new ones.”

Although peer pressure and impractical lifestyle goals are cited as primary drivers of loan-induced financial stress, Dr. Gurveen Ranger, Clinical Psychologist at Sage Clinics, says, “A commonly reported trigger in my clinical experience has been associated with adapting to high living costs.” 

“Cost of education and healthcare are also increasing, which impacts a family’s ability to remain financially secure, and this is often coupled with a fluctuating market in terms of job security and the real estate booms, and downturns have a knock-on effect to financial security,” adds Ranger.

Most people, however, fall further into debt as they take out new personal loans to get by.

“More debt is not the answer to the problem,” Ahmed says. “On the one hand, getting a loan is as easy as possible. Then the banks come after our life, so we get another loan to pay off the first loan.”

“We are living in a debt conveyor belt.” 

Living with financial insecurity over their heads – impacts a person’s mental health and their ability to hold down jobs and see friends. It feeds into everything they do.

“The emotional and psychological impact of indebtedness can manifest in complex ways. Borrowers may experience feelings of inferiority, embarrassment, fear, and guilt, intricately linked to societal expectations, self-worth, and personal identity,” says Rasheed.

Embarrassment may arise from the perceived judgment of others or societal stigmas associated with financial struggles. 

“For those who have significant debt that is difficult to pay back after borrowing, they will typically experience an exacerbation in these complex emotions and difficulty concentrating on much else,” says Ranger. “Depression is a common consequence of financial stress.”

According to Rasheed, fear can stem from uncertainties about the future and the ability to meet financial obligations. Additionally, guilt may emerge from a sense of responsibility or self-blame for the financial predicament. 

“Therefore, understanding borrowers’ stress necessitates a holistic perspective that considers not only the financial aspects but also the emotional and psychological dimensions intertwined with societal perceptions and individual identity,” adds Rasheed.


Many banks say they know the potential for customers to build up large debts that they find difficult to pay off, and they claim that customer credit departments are instructed to support those who cannot make their monthly repayments.

However, loan recovery methods have become more stringent, reflecting financial institutions’ need to mitigate risk, adding more stress to debtors. Professional loan recovery agencies are proliferating. Agents sometimes even resort to illegal measures to achieve these targets, and most go unreported.

“Tactics such as incessant calls, threatening emails, and legal actions have become more prevalent, exacerbating the emotional and psychological toll on individuals facing debt-related pressures. This increasing pressure can be stressful for debtors, especially those over-leveraged.”

Sagar says that loan collection agencies’ approaches are markedly more aggressive than the original lenders, “This shift is primarily because once the bad debt is sold, the collection agency’s profit is directly tied to the amount they recover. Consequently, their methods can be relentless and high-pressure, significantly increasing debtor stress. This aggressive approach can lead to a situation where debtors feel harassed and overwhelmed, exacerbating their financial and emotional distress.”


Debt-related issues have been identified as a risk factor for suicidal ideation. “Those who are economically stressed are three times more likely to experience suicidal thoughts than those without debt,” says Ranger. “While this remains to be seen to a significant level in my clinical experience, there has been an increase in reports of suicides in the region related to debt.” 

Therefore, experts urge seeking financial advice or counseling at the earliest signs of financial strain is essential rather than waiting until the situation becomes dire. Seeking out such services can provide support to cope with anxiety, depression, and other mental health challenges brought on by aggressive debt recovery efforts. 

“Early counseling can provide strategies for managing debt more effectively and help prevent the stress and challenges associated with overwhelming debt,” says Koojiman.

While loans benefit those who manage their finances wisely, there’s a growing concern that more people are falling into a debt trap due to a lack of education, resulting in over-borrowing or leveraging income beyond sustainable limits. 

“Steep interest rates are exacerbating this issue with borrowers finding it difficult to keep up with repayments. This leads to financial stress and potential defaults,” adds Koojiman.

Ranger says the impact of debt on one’s mental health can be significant and consuming. “It is important to remember you are not alone and do not have to struggle in silence. Professionals – both in the financial and mental health fields — can be crucial to helping you navigate this process to improve your financial stability and psychological well-being.” 

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Suparna Dutt D’Cunha is the Editor at Fast Company Middle East. She is interested in ideas and culture and cover stories ranging from films and food to startups and technology. She was a Forbes Asia contributor and previously worked at Gulf News and Times Of India. More