Key Takeaways
- →Pakistan’s Debt Profile Pakistan’s total public debt has crossed PKR 65 trillion (USD 225 billion) as of December 2023 , reflecting a 70% debt-to-GDP ratio , well above the 60% li…
- →• Short-Term Borrowing Risks: 52% of Pakistan’s debt is short-term, increasing rollover risks.
- →• Currency Depreciation: The PKR depreciated 22% in 2023 , making external debt more expensive.
Overview
Pakistan’s Debt Profile Pakistan’s total public debt has crossed PKR 65 trillion (USD 225 billion) as of December 2023 , reflecting a 70% debt-to-GDP ratio , well above the 60% limit prescribed in the Fiscal Responsibility Act.
Debt Breakdown (FY 2023-24)
Challenges in Debt Management
• Short-Term Borrowing Risks: 52% of Pakistan’s debt is short-term, increasing rollover risks.
• Currency Depreciation: The PKR depreciated 22% in 2023 , making external debt more expensive.
• Ballooning Interest Payments: Debt servicing consumes 58% of government revenue , crowding out development spending.
Recommendations for Sustainable Debt Management
• Long-Term, Low-Cost Borrowing: Negotiating concessional loans with IMF, World Bank, and ADB can reduce financing costs.
• Debt Transparency: Publishing quarterly debt reports and ensuring fiscal discipline can restore investor confidence.
• GDP Growth Strategy: Expanding exports, boosting FDI, and privatizing loss-making SOEs can reduce debt reliance.
Without structural reforms, Pakistan risks falling into a debt trap , where new borrowing is needed just to service existing debt.
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