Pakistan's debt crisis is spiraling, with a staggering Rs9.3 trillion added in just one fiscal year! Imagine the weight of that number. But is this simply a matter of bad luck, or are deeper systemic issues at play? Let's dive into the details and uncover the truth behind Pakistan's growing debt burden.
According to recent reports presented to the National Assembly, Pakistan's public debt ballooned by a shocking Rs9.3 trillion during the 2024-25 fiscal year. To put that into perspective, that's an average daily increase of approximately Rs25.4 billion! Finance Minister Muhammad Aurangzeb revealed in a written statement that the total public debt had reached a staggering Rs80.5 trillion by June 2025. Using a more conservative calculation method defined by the Fiscal Responsibility and Debt Limitation Act (FRDLA) of 2005, the increase was still a significant Rs8.2 trillion, or about Rs22.3 billion per day. Think of it this way: every single day, Pakistan was digging itself deeper into debt to the tune of billions of rupees.
And here's the part most people miss... The debt-to-GDP ratio, a crucial indicator of a country's ability to manage its debt, also took a hit. It rose from 67.8 percent in FY24 to 70.8 percent in FY25. Under the FRDLA's more restrictive definition, it reached 64.4 percent. This increase signals a concerning trend, suggesting that Pakistan's economy is struggling to keep pace with its growing debt.
Now, let's talk about the government's response. Minister Aurangzeb highlighted several fiscal consolidation measures implemented to address the situation. These included achieving primary surpluses (where income exceeds expenditure before interest payments) for two consecutive years, shifting government borrowing towards longer-term instruments (meaning borrowing money for longer periods), and executing Pakistan’s first sovereign debt buybacks (essentially, buying back some of its own debt to reduce the overall burden).
The government also repurchased Rs1.5 trillion in debt during FY25 and plans to repurchase an additional Rs1.1 trillion in FY26. Furthermore, the average maturity of domestic debt has increased from 2.8 years to 3.8 years, resulting in reported interest savings of Rs880 billion in FY25. This is a positive step, as longer-term debt provides more stability and reduces the risk of short-term repayment pressures.
But here's where it gets controversial... While these measures paint a picture of proactive debt management, some argue that they are merely short-term fixes and don't address the underlying structural issues that contribute to Pakistan's debt problem. For example, critics point to the country's reliance on external borrowing and its persistent trade deficits as major factors driving up debt levels. Is the government truly tackling the root causes, or just applying band-aids to a much deeper wound?
Interestingly, the first quarter of FY26 saw a slight improvement. The central government's debt decreased by Rs1.283 trillion, largely due to significant profit transfers from the State Bank of Pakistan (SBP). SBP data indicates that total central government debt stood at Rs76.605 trillion at the end of September 2025, compared to Rs77.888 trillion in June 2025. Domestic debt experienced the most significant decline, dropping by Rs1.048 trillion to Rs53.424 trillion.
Analysts view this early reduction as a positive sign, as it alleviates some of the pressure from interest payments. They attribute the decline to improved debt management, fiscal consolidation efforts, and the substantial Rs2.4 trillion in profit transfers from the SBP to the federal government last fiscal year. Long-term domestic debt decreased by Rs692 billion, falling to Rs44.961 trillion, while short-term debt dropped by Rs356 billion to Rs8.4 trillion. External public debt, measured in rupees, also saw a decrease of Rs236 billion, reaching Rs23.181 trillion in September 2025.
Debt under the Naya Pakistan Certificates, a scheme aimed at attracting investment from overseas Pakistanis, saw a slight increase from Rs62 billion to Rs63 billion during the same period.
Beyond the immediate debt figures, Minister for Planning Ahsan Iqbal informed lawmakers about the progress of the China-Pakistan Economic Corridor (CPEC). Eight CPEC projects, valued at USD 759.56 million, are currently under implementation, while 43 projects, with a total value of USD 24.7 billion, have been completed. Additionally, five PSDP scholarship projects, costing Rs54.7 billion, are in progress, with Rs5.5 billion allocated for them in the current fiscal year. These projects represent significant investments in Pakistan's infrastructure and human capital, but they also contribute to the country's overall debt burden.
So, what does all this mean for the average Pakistani citizen? A high debt burden can lead to increased taxes, reduced government spending on essential services like healthcare and education, and ultimately, a lower standard of living. It also makes the country more vulnerable to economic shocks and external pressures.
Now it's your turn. Do you believe the government's current strategies are sufficient to address Pakistan's debt crisis? Are there alternative solutions that should be explored? What role should international organizations and foreign aid play in helping Pakistan manage its debt? Share your thoughts and opinions in the comments below. Let's have a constructive discussion about this critical issue facing our nation.
