Pakistan Plans Debt Reduction Inflation Control and Economic Growth by 2028
Pakistan Aims to Reduce Debt, Curb Inflation, and Boost Growth by 2028
ISLAMABAD – The Finance Ministry has unveiled ambitious plans to ease Pakistan’s debt burden, control inflation, and stimulate economic growth over the next five years.
According to the Medium-Term Debt Strategy, the government aims to reduce public debt from the current 66 percent of GDP to 61.5 percent by 2028. Interest payments on this debt are also expected to fall sharply, from 7.8 percent of GDP to 4.9 percent over the same period.
The strategy targets a reduction in external debt to 18 percent of GDP by 2028, while the average maturity of domestic loans will be extended to 4.25 years. Officials say this move will help the government better manage financing needs and ease pressure on the national budget.
Economic projections indicate inflation will moderate gradually, falling from 7.5 percent this year to 6.8 percent next year and stabilizing at 6.5 percent by 2028. At the same time, GDP growth is expected to pick up, rising from 4.2 percent this year to 5.1 percent in the next fiscal year, and reaching 5.7 percent by 2028.
The federal primary surplus is projected at 1.3 percent of GDP this year, settling at around 1 percent in subsequent years. Meanwhile, the budget deficit is expected to shrink from 5 percent of GDP this year to 3.9 percent by 2028.
Current figures show Pakistan’s total outstanding debt has climbed to Rs 78.7 trillion. The government plans a steady reduction of the debt-to-GDP ratio over the next three years.
In a related move to meet International Monetary Fund (IMF) conditions, the government has also developed a plan to extend the repayment period for both domestic and external loans. Under the strategy, the average maturity of domestic debt will increase from 3 years and 8 months to 52 months, while external debt will see its maturity extended from 6.1 years to 76 months. The IMF has set 2028 as the deadline for full implementation of these targets.
Officials say the extended repayment periods will help reduce financing pressure and provide greater stability to the country’s economic outlook in the coming years.
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