Islamabad, Jan 15: As of fiscal year 2024, each Pakistani citizen carries a debt burden of approximately Rs. 302,000, representing an 11.3 percent increase compared to the previous fiscal year, according to the Fiscal Policy Statement 2025 presented to the National Assembly.
This growing debt primarily stems from the government’s inability to curb its rising budget deficit, which surged to Rs. 7.7 trillion, or 7.3 percent of GDP, further exacerbating the nation’s financial challenges.
The report also highlights a significant breach of fiscal management principles. Despite the legal mandate to restrict the federal deficit to 3.5 percent of GDP, the government’s budget for June 2023 had set it at 7.1 percent, deviating from the law’s requirements without providing any justifiable reasons for the discrepancy.
Public debt saw a sharp rise of nearly 15 percent, climbing to Rs. 72.3 trillion, primarily due to escalating interest payments and depreciation of the national currency. Interestingly, as a percentage of GDP, public debt showed a decline from 74.8 percent in June 2023 to 67.2 percent in June 2024, reflecting some progress in the national economy’s relative debt burden.
On the expenditure side, current expenditures exceeded budgeted estimates by 5.5 percent, mainly driven by higher interest costs amid elevated interest rates. Meanwhile, funds allocated for the Public Sector Development Program (PSDP) were reduced by Rs. 218 billion, bringing the total to Rs. 1.03 trillion, potentially limiting future development initiatives.
World Bank $20B Pledge to Transform Pakistan in 10 Years
Despite these fiscal setbacks, the report also outlines positive signs for the economy, including reduced inflation rates, a surplus in the primary fiscal balance, and a stable exchange rate. Additionally, the current account deficit has remained almost negligible, hinting at a balance in foreign trade. However, underperformance in overall revenue generation continues to weigh heavily on the fiscal deficit, signaling the need for robust economic reforms and better fiscal discipline.
In conclusion, while there are some encouraging signs of economic stabilization, Pakistan’s fiscal management remains under significant strain, requiring decisive measures to reduce debt levels, curb deficits, and enhance revenue generation for long-term economic stability.
