Debt Burden Triples in a Decade, Every Pakistani Now Owes Rs318,252

ISLAMABAD – Pakistan’s debt has swelled to alarming levels over the past 10 years, with each citizen now effectively carrying a debt load of Rs318,252 — more than three times the Rs90,047 recorded a decade ago. The findings come from a new report by the Economic Policy & Business Development (EPBD), an independent think tank.

Key Highlights

• Per capita debt: Rs90,047 in 2014 → Rs318,252 in 2024.
• Average annual growth in debt: 13%.
• Debt doubling rate: Every six years at current pace.
• Public debt-to-GDP ratio: 70.2% (well above the 60% legal ceiling).
• Regional comparison: Pakistan second only to Sri Lanka (96.8%); higher than Thailand (61.1%), India (57.1%), Indonesia (40.2%), Bangladesh (36.4%).
• Currency devaluation: Rupee has lost 71% of its value since 2020.
• Interest rates: Peaked at 22% in FY2023-24.
• Annual debt burden: Rs7.2 trillion.
• Proposed remedy: Cutting policy rate from 11% to 9% could save Rs12 trillion in loan interest.
• Deadline warning: Debt sustainability limits have been consistently breached.

Debt Levels Rising Faster Than Economy

According to the report, Pakistan’s total debt now stands at 70.2% of GDP, a level significantly higher than regional peers and well above the 60% cap set under the Fiscal Responsibility and Debt Limitation Act, 2005.

The think tank warns that the country is stuck in a “debt trap”: high interest rates fuel currency devaluation, which further inflates the debt burden, creating a vicious cycle.

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Red Flags for Policy Makers

The report flags several worrying trends:

• A 71% rupee devaluation since 2020.
• Peak interest rates of 22% during 2023-24.
• Repeated breaches of debt sustainability laws.

At the current pace, the debt burden doubles every six years — raising questions about how long Pakistan can sustain its finances without major reforms.

Recommendations

The EPBD has urged the government to:

• Impose strict financial discipline.
• Expand the tax net to increase revenues.
• Cut policy rate from 11% to 9% — a move it says would lower interest costs by Rs12 trillion and free up fiscal space.
• Prioritize export growth and debt restructuring to improve competitiveness and restore stability.

The think tank also cautioned that Pakistan’s Rs7.2 trillion annual debt burden must be used for growth-generating activities, not just to service old loans.

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