Pakistan faces economic challenges, as the burden of debt and inflationary pressures trigger alarm across the nation.
The Ministry of Finance, in its three-year economic strategy, has disclosed that the federal government must borrow over 30 billion rupees daily to sustain its financial obligations.
The Ministry pointed out that the federal government will still face a substantial shortfall even after disbursing funds to provinces and servicing interest on existing debts. This scenario necessitates further borrowing to manage routine expenditures such as pensions and salaries. The financial outlook worsens with anticipated interest payments slated to hit 10.3 trillion rupees in the coming fiscal year. Additionally, the combined load of transfers to provinces and interest obligations is expected to surpass 20.63 trillion rupees.
Post-budget projections indicate that following allocations for interest and transfers under the National Finance Commission (NFC) Award, only 500 billion rupees will remain for other federal uses. This situation has prompted calls from Ministry sources to reconsider and possibly reduce the allocations made under the NFC Award and for interest expenses.
Moreover, the International Monetary Fund (IMF) has raised concerns about Pakistan’s escalating debt profile. According to the IMF, the total debt burden could reach approximately 820 trillion rupees by the end of the fiscal year on June 30, 2024. Furthermore, projections for the following fiscal year (2024-25) suggest that the total public debt and liabilities might climb to 922.4 trillion rupees, underscoring a persistent and escalating fiscal challenge.
