Pakistan’s Debt Soars as Citizens Shoulder Rs318,000 Each, EPBD Report Warns
Islamabad – Every Pakistani now carries a personal share of debt totaling Rs318,252, more than triple the Rs90,047 burden recorded a decade ago, according to a recent report by the Economic Policy and Budgetary Desk (EPBD).
The report highlights that the national debt has been rising at an average rate of 13% per year, effectively doubling every six years. Currently, Pakistan’s total loan amounts to 70.2% of GDP, surpassing the 60% ceiling set under the Fiscal Responsibility Act.
In comparison, neighboring countries show lower debt levels: India’s debt-to-GDP ratio is 57.1%, Bangladesh stands at 36.4%, while Sri Lanka faces the heaviest burden in the region at 96.8%.
Debt servicing costs have also escalated, with interest payments now consuming 7.7% of the economy. A steep rupee depreciation — down 71% since 2020 — has driven external debt up by 88% in local currency terms, the EPBD report noted.
The think tank warned that Pakistan’s limited fiscal space leaves little room for development or infrastructure investment. It emphasized that raising taxes on an already stretched population is not a viable solution. Instead, it recommended expanding the tax base and reducing the policy rate from 11% to 9%.
According to the report, this move could save the government Rs1.2 trillion in interest payments, freeing up resources for growth and making businesses more competitive.
The EPBD stressed the urgent need for fiscal discipline, cautioning that without measures to lower borrowing costs, Pakistan risks sliding into an even deeper economic crisis.
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