A deeply concerning report on Pakistan’s economy has emerged, revealing that the nation’s public debt has surged from 60% to 71% of its GDP over the last decade.
However, the more critical challenge lies in the servicing of this debt. In the fiscal year 2025, debt payments consumed a staggering 89% of the total net federal revenue, leaving minimal funds for public development and essential services. This follows an even more severe situation in FY2023, when debt servicing payments reached 120% of the net revenue.
While countries like Japan have a much higher debt-to-GDP ratio (around 200%), Pakistan’s crisis is defined by the overwhelming burden of its debt payments relative to its income.
Projections warn that if this trend continues, the debt-to-GDP ratio could climb to 85% by 2035. Such a level would far exceed the legal limit set by Pakistan’s own Fiscal Responsibility and Debt Limitation Act (FRDLA), which was passed by its parliament nearly two decades ago.
