Pakistan's Debt Hits Record High at PKR 67.816 Trillion

Pakistan’s debt has reached an unprecedented high, hitting PKR 67.816 trillion, as reported by the State Bank of Pakistan (SBP). 

This alarming figure represents a 15 percent increase over the past year, with an addition of Rs 8,852 billion to the federal government’s total debt.

The central bank's data highlights a stark financial landscape. In May 2023, the country’s total debt was recorded at Rs 58,964 billion. 

By April 2024, this figure had ballooned to Rs 66,086 billion, illustrating the rapid escalation of the debt burden. 

This surge in debt underscores the fiscal challenges facing the federal government, as it struggles to manage both domestic and external financial obligations.

One of the critical components contributing to this debt is Pakistan’s domestic debt, which has also soared to a record level of Rs 46,208 billion. 

This domestic debt constitutes a significant portion of the total debt, reflecting the government’s heavy reliance on internal borrowing to meet its financial needs.

Interestingly, the SBP noted a decline in the ‘Naya Pakistan Certificates’, with annual debt decreasing by 37.51 percent to Rs 87 billion. 

Despite this reduction, the overall debt trajectory remains upward. Additionally, there was a slight decrease in the federal government’s external debt, which fell by 1.4 percent, from Rs 21,908 billion to Rs 21,608 billion. 

While this decline is a positive sign, it is not enough to offset the overall increase in the debt levels.

The debt situation is further exacerbated by the massive amounts spent on debt servicing. 

According to an official document from the finance ministry, Pakistan paid Rs 5.517 trillion in debt servicing during the first nine months of the fiscal year 2023-24. 

This includes Rs 4,807 billion for domestic debt servicing and Rs 710 billion for international debt servicing.\

The fiscal operation report for the July-March period reveals that the gross revenue receipts of the federal government stood at Rs 9.1 trillion. 

Out of this, Rs 3.8 trillion was provided to the provinces under the NFC Award, leaving the net revenue receipts at Rs 5.3 trillion. 

The provincial allocations were substantial, with Punjab receiving Rs 1,865 billion, Sindh Rs 946 billion, KP Rs 623 billion, and Balochistan Rs 379 billion from the divisible pool.

These figures paint a challenging picture for Pakistan’s financial health. 

The increasing debt burden, coupled with substantial debt servicing requirements, places immense pressure on the country’s economy. 

The government’s fiscal woes are compounded by the need to balance revenue generation with debt repayments, all while ensuring sufficient funds for development and welfare programs.

The record-high debt levels highlight the urgent need for effective fiscal management and sustainable economic policies. 

Addressing this debt crisis will require a multifaceted approach, including enhancing revenue collection, curbing unnecessary expenditures, and implementing structural reforms to stimulate economic growth. 

As Pakistan navigates these financial challenges, the path to economic stability will not be easy. 

However, with strategic planning and prudent fiscal policies, it is possible to mitigate the debt burden and steer the country towards a more stable and prosperous future.