ISLAMABAD: Pakistan’s total government debt has exceeded a staggering 84 trillion (84,000 billion) rupees, presenting a severe challenge to the nation’s economic health, the Ministry of Finance revealed in a comprehensive new report.
Most alarmingly, the report shows that the debt pile grew by 10 trillion (10,000 billion) rupees in the last year alone.
The report, prepared under an IMF framework, also identifies critical risks and challenges. The ministry clearly states that an “economic slowdown” is the single biggest threat to the country’s debt sustainability. Furthermore, any volatility in interest rates or the exchange rate could sharply increase this debt burden.
Detailing the composition of the debt, the report notes that 67.7% is domestic, while 32.3% is external. A significant 80% of the domestic debt was acquired at floating rates, meaning the risk from high-interest rates remains constant.
Despite these immense challenges, the Ministry of Finance presented an optimistic outlook. The report projects that the debt-to-GDP ratio is expected to fall from 70.8% to 60.8% over the next three years (2026-2028), with debt expected to “remain sustainable” in the medium term.
The report also highlighted recent economic achievements, including economic growth rising from 2.6% to 3.0% last year, and inflation dropping dramatically from 23.4% to 4.5%. It also noted that the federal fiscal deficit remained below its target and the primary balance was in surplus.
