New Delhi: Pakistan’s finance ministry has admitted that “public debt dynamics remained a key challenge” during the last fiscal year, as the increase in total public debt was “driven mainly by higher interest payments and exchange rate movements,” according to a report in the Karachi-headquartered Express Tribune newspaper.
The debt burden of every Pakistani increased by 13 per cent to Rs 333,000 (Pakistani rupee) in the last financial year, while public debt remained a “challenge” due to a budget deficit that exceeded the statutory limit by Rs3 trillion, according to a Fiscal Policy Statement presented to Parliament in the neighbouring country.
The figures also show the high priority that Pakistan accords to defence expenditure, reflecting the formidable control that the military exercises over the government. The welfare of the people on the other hand is relegated to the background in the budget.
Development expenditure, including net lending, was budgeted at Rs 1.7 trillion, but actual spending was Rs 1.4 trillion, equivalent to 84 per cent of the allocation.
Defence expenditure was budgeted at Rs2.1 trillion, while actual expenses stood close to Rs 2.2 trillion, representing 103 per cent of the allocated budget, according to the report.
Fiscal year 2024-25 was the first full financial year of the government led by Prime Minister Shehbaz Sharif, which assumed office in April 2024.
The finance ministry said total public debt as a percentage of GDP increased from 67.6 per cent in June 2024 to 70.7 per cent in June 2025.
The statement said that from June 2024 to June 2025, total public debt increased from Rs71.2 trillion to Rs80.5 trillion, mainly due to higher interest payments. These interest costs, the report noted, were the outcome of additional borrowing undertaken to finance spending beyond the limits set in law.
The rise in public debt, both in absolute terms and relative to the size of the economy, undermines the federal government’s claim of fiscal discipline. During the year, the government added new departments, expanded the federal cabinet and purchased new furniture and cars despite claiming austerity.
The finance ministry has admitted in the report that “public debt dynamics remained a key challenge” during the last fiscal year, as the increase in total public debt was “driven mainly by higher interest payments and exchange rate movements”.
It said the government’s medium-term debt management strategy continues to focus on reducing gross financing needs, extending maturity profiles and diversifying financing instruments to ensure sustainability.
The statement further revealed that the federal government spent Rs 3.1 trillion, or 2.7 per cent of GDP, over and above the 3.5 per cent federal fiscal deficit limit set by Parliament.
Revenue collection remained close to budget targets, while expenditures slightly surpassed their budgeted levels, the report added.
(IANS)
