ISLAMABAD ( WEB NEWS )
Every citizen of Pakistan is burdened with debt amounting to Rs. 318,252, according to a report released by the Economic Policy and Business Development think tank.
Ten years ago, each citizen carried a debt of Rs. 90,047. Over the past decade, this figure has more than doubled, with an average annual increase of 13%. The report warns that Pakistan’s debt burden has risen to alarming levels.
It stated that the country’s debt now equals 70.2% of its economy, higher than neighboring countries, where India’s stands at 57.1% and Bangladesh’s at 36.4%. The think tank noted that Pakistan is caught in a dangerous debt trap, with interest payments alone consuming 7.7% of the economy due to high interest rates.
Since 2020, the rupee’s value has depreciated by 71%, causing external debt (in local currency terms) to rise by 88%. Pakistan’s debt has exceeded the limit set under its own Fiscal Responsibility Act by 10%, while debt servicing has reached nearly 8% of GDP.
The report further emphasized that imposing more taxes on an already overburdened population is not a viable solution. Instead, the tax net should be broadened, and interest rates must be reduced. According to the think tank, if the policy rate is lowered from 11% to 9%, the government could save Rs. 1.2 trillion in interest payments. This would expand fiscal space and make businesses more competitive.
It concluded that Pakistan urgently needs to adopt financial discipline and reduce the cost of borrowing. Otherwise, the country will face an even more severe economic crisis. Currently, the government lacks the fiscal space for development expenditures, leaving little to no capacity for infrastructure investment or rehabilitation projects.