Rising public debt raises alarm, now standing at an extent of Rs76 trillion.
Pakistan's Soaring Public Debt: A Troubling Trend
Pakistan's public debt has ballooned to an astounding PKR 76,007 billion, resulting from years of reckless spending and political mismanagement. Here's what you need to know.
The Alarming Numbers
As of March 2025, the debt burden stands at 66.27% of GDP, far exceeding the limit set by the Fiscal Responsibility and Debt Limitation Act. Essentially, each Pakistani - newborns included – owe PKR 277,462 in debt.
The Debt Increment
In just three years, PKR 31 trillion has been added to the debt, with the majority of this increase occurring since April 2022. Owing to this rapid accumulation, Pakistan now has one of the fastest-growing debts in its history.
The Parties Responsible
From Musharraf's military regime to the current administration, each government has been guilty of over-relying on borrowing to finance expenditures. Over the past decade, public debt has skyrocketed by 337%, with successive governments contributing to the problem.
The Struggle for Fiscal Sustainability
Despite rhetoric of austerity, Pakistan's total population of 241.5 million and GDP of PKR 114.69 trillion have not been enough to stem the tide of debt. Interest payments for the first nine months of FY2025 totaled PKR 6.44 trillion - 66% of the PKR 9.78 trillion budget for the entire year.
The External and Domestic Debt Breakdown
As of March 2025, domestic debt stood at PKR 51.52 trillion, while external debt hit $87.4 billion. The government is scrambling to manage this massive burden, claiming improved cash flow planning and the use of longer-term debt instruments have helped mitigate short-term risks.
The Long-term Strategy
The government has focused on long-term, concessional loans primarily sourced from multilateral and bilateral partners. This strategy has been successful in lowering immediate repayment pressures.
The Impact on Pakistani Citizens
The rapid increase in public debt poses several challenges to Pakistan's economy: increased interest payments, concerns about fiscal sustainability, diminished economic security, and a tarnished international reputation. Pakistan's economic growth, projected to be 2.7% in 2025, has shown signs of gradual recovery, but managing public debt effectively is essential to secure long-term economic stability and growth.
The rapid increase in public debt, a troubling trend in Pakistan, has not only been fueled by years of excessive borrowing to finance expenditures in various sectors such as history, finance, and business, but also by the over-reliance on debt among different governments since Musharraf's military regime. Despite the government's strategy of securing long-term, concessional loans, the high debt burden could potentially impact the economic security of Pakistani citizens, affecting their financial future.
