Pakistan’s economic circumstances have gotten far worse, as evidenced by a sharp rise in the country’s national debt. The federal government’s debt increased by PKR 4,304 billion (PKR 36,548 crores) in the first eight months of the current fiscal year, reaching PKR 69.114 trillion as of October 2024. The primary cause of this increase is the PKR 4,556 billion increase in domestic borrowing, although the PKR 251 billion decrease in international debt occurred within the same time period.
Political unrest, structural inefficiencies, and rising inflation have all contributed to Pakistan’s economy’s extreme strain. Public unhappiness and economic difficulties are exacerbated by the inflation rate, which is still among the highest in Asia.
In September 2024, Pakistan obtained a $7 billion bailout package from the International Monetary Fund (IMF) to alleviate its financial problems. This marks the country’s 25th engagement with the IMF since independence in 1947, underscoring its reliance on international financial assistance.
Concerns regarding long-term debt sustainability and the economic changes required for stability and growth persist despite recent stabilisation efforts, which include a forecasted recovery in economic growth to 2.5% for FY24.
The rise in Pakistan’s public debt serves as a reminder of the nation’s persistent economic difficulties. Even though international loans have been used to stabilise the economy immediately, there are still serious dangers to the fiscal system’s stability and public unrest because of the high rates of unemployment and inflation.
