Pakistan’s total debt has surged to a staggering Rs 71 trillion, posing a significant threat to the country’s economic stability. The federal government’s recent disclosure of domestic and foreign debt details reveals a worrying trend, with 66% of the debt being domestic, totaling over Rs 47 trillion, and the remaining 34% being foreign debt, amounting to more than Rs 24 trillion.
The Ministry of Finance has outlined a debt repayment schedule, with Pakistan set to repay Rs 18,700 billion in 2024, followed by decreasing amounts in subsequent years until 2031. However, the sheer magnitude of the debt and the repayment schedule raises questions about the government’s ability to manage the debt burden.
The government’s 3-year economic plan aims to increase the provinces’ share in the federal budget and revise the resource distribution method among the provinces. While this plan is a step in the right direction, it may not be enough to address the country’s rising debt burden. Total debts are expected to reach Rs 79,731 billion by the end of the current fiscal year, with an estimated increase of Rs 7,671 billion in domestic loans and Rs 818 billion in foreign loans.
The consequences of Pakistan’s soaring debt are far-reaching, with potential impacts on the country’s credit rating, inflation, and economic growth. The government must take concrete steps to address the debt burden, including reducing expenditures, increasing revenue, and promoting economic growth.
Furthermore, the government must also focus on improving the country’s tax-to-GDP ratio, which is currently one of the lowest in the world. Increasing tax revenue will help reduce the reliance on debt and improve the country’s fiscal discipline.
In conclusion, Pakistan’s debt burden is a significant threat to the country’s economic stability. The government must take immediate action to address the debt burden and promote economic growth.
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