Pakistan has once again exceeded the statutory limit for public debt, as the country’s debt-to-GDP ratio has reached 70.2%, significantly higher than the 60% limit mandated by law.
The Director General of Debt at the Ministry of Finance, while briefing the National Assembly Standing Committee on Finance and Revenue, informed that the debt-to-GDP ratio reached 70.2% by the end of the fiscal year 2025, against the legal ceiling of 60%.
Independent experts briefing the committee provided a detailed overview of Pakistan’s current public debt situation, its challenges, and necessary reforms. The experts presented an in-depth analysis of debt sustainability, repayment obligations, and the drivers of increasing debt. They stated that Pakistan’s economy is not growing as fast as the debt is, which has limited resources for development and social sectors.
The experts stressed the need for immediate reforms, including establishing an integrated system in the Ministry of Finance for forecasting interest rates and the yield curve, increasing borrowing opportunities from non-bank sources, obtaining external debt on long-term and low-interest rates, and promoting exports and foreign investment.
The report suggests that if interest rates remain stable and GDP growth rate is around 5% annually, the debt-to-GDP ratio could drop below 60% again by the fiscal year 2035. However, this requires strict coordination and transparent debt management among the Ministry of Finance, the State Bank, and the Parliament.
The committee raised questions on debt management, external debt, the role of international financial institutions, and potential policy measures for long-term fiscal stability. The committee praised the experts’ insights and emphasized the importance of transparent and coordinated reforms.
