Pakistan’s financial mismanagement continues, per capita debt worryingly high

The average debt of every Pakistani citizen has become very high. It is worth mentioning that the current financial situation of the country is due to the habit of successive governments to run their public business through loans and borrowings from international lenders.

The average debt per citizen in Pakistan has now reached 295,000 Pakistani rupees. The total debt on the country at present is set to rise by 8.36 trillion Pakistani rupees to 71.24 trillion Pakistani rupees in 2024. Last year, Pakistan’s debt to international money lenders stood at 62.88 trillion Pakistani rupees. Citing a report by Pakistan’s Finance Ministry, ARY News said that Pakistan’s current debt level is 67.2 per cent higher than the country’s gross domestic product (GDP).

This increase in debt highlights the growing financial challenges the country is currently facing. Domestic debt within Pakistan has currently increased by PKR 8.350 trillion, reaching a total of PKR 47.160 trillion. On the other hand, Pakistan’s external debt now stands at PKR 33.062 trillion. Out of this, the net government external debt has reached PKR 21.75 trillion.

The same report by ARY News also reveals that Pakistan’s debt to the International Monetary Fund (IMF) has increased by 292 billion Pakistani rupees, taking the total debt to the IMF to 2.33 trillion Pakistani rupees. Moreover, the largest share of Pakistan’s domestic debt comes from federal government bonds, amounting to 32.8 trillion Pakistani rupees.

The current composition of this debt owed by the country includes Pakistan Investment Bonds (PIBs), which have exceeded 28 trillion PKR, and Sukuk bonds, which total amount to 4.77 trillion PKR. Additionally, prize bonds contribute 345 billion PKR to domestic debt.

Pakistan Finance Ministry document quoted in the ARY News report also indicated that Pakistan’s foreign currency debt under domestic debt amounts to PKR 374 billion, and Naya Pakistan Certificates amount to PKR 84 billion.

Such a massive increase in domestic and foreign debt owed by the country to its lenders underlines the urgent need for economic reforms and management.