Per Capita Debt Rises Sharply
Pakistan’s public debt has reached alarming levels, with every citizen now owing an average of Rs318,252, according to a newly released economic report. Economists say this growing burden is a clear warning sign for the country’s fragile economy.
Over the past decade, Pakistan’s per capita debt has more than tripled. In 2015, the figure stood at around Rs90,000 per person. By 2024, it has surged beyond Rs300,000, reflecting a continuous and rapid rise in borrowing.
National Debt Growing at 13% Annually
Experts highlight that Pakistan’s overall debt is expanding at an average rate of 13% per year. At this pace, the country’s debt doubles roughly every six years. Such growth is considered unsustainable and a major threat to long-term economic stability.
The report also reveals that Pakistan’s debt-to-GDP ratio has climbed to 70.2%, well above the thresholds considered safe for developing economies. Earlier this year, Pakistan’s public debt hit a record PKR 77.9 trillion, underlining the scale of the crisis. For comparison, India’s debt-to-GDP ratio stands at about 57%, while Bangladesh maintains a level near 39%, according to World Bank data.
Economic Warning Signs
Economists stress that rising debt leaves less fiscal space for development projects, social programs, and infrastructure. Instead, a growing portion of the national budget is consumed by debt servicing. In the current financial year, Pakistan is expected to spend nearly half of its revenues on interest payments alone.
Analysts caution that without significant reforms, the mounting pressure could trigger a severe economic crisis, potentially forcing the country into further reliance on external bailouts. Pakistan has already turned to the International Monetary Fund (IMF) multiple times over the past two decades, with its most recent bailout package approved in 2023.
Proposed Solutions
The report offers a series of recommendations aimed at easing the debt burden. Among the most critical are:
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Fiscal discipline: Cutting unnecessary expenditures and ensuring transparency in public spending.
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Tax reforms: Expanding the tax net to include untapped sectors of the economy. Currently, less than 4 million people file taxes in a nation of 240 million.
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Monetary policy adjustments: Reducing the policy rate from 11% to 9% to lower debt servicing costs and encourage investment.
Economists argue that such measures could save the government up to Rs1.2 trillion annually in interest payments.
Impact of Lower Interest Rates
Lowering interest rates, the report notes, would also reduce the cost of doing business. This could stimulate private sector investment, create jobs, and support sustainable growth. By making borrowing cheaper, both local entrepreneurs and international investors may be encouraged to inject capital into the economy.
However, critics warn that any reduction in interest rates must be carefully balanced with inflation control. Pakistan has struggled with double-digit inflation in recent years, largely driven by currency depreciation and rising global commodity prices.
Urgent Decisions Ahead
The report concludes that Pakistan’s government faces tough choices. Failure to take immediate corrective action could worsen the debt crisis, undermining investor confidence and deepening social hardship.
Economists insist that the coming years will be decisive. Strong reforms could set the country on a path toward stability, while inaction risks pushing Pakistan further into financial distress.
