Explore
Settings

Settings

×

Reading Mode

Adjust the reading mode to suit your reading needs.

Font Size

Fix the font size to suit your reading preferences

Language

Select the language of your choice. NewsX reports are available in 11 global languages.
we-woman
Advertisement

Pakistan’s Internal Borrowings Lead To Double Debt Crisis

The internal debt of Pakistan's central government surged by PKR 537 billion in July this year.

Pakistan’s Internal Borrowings Lead To Double Debt Crisis

The internal debt of Pakistan’s central government surged by PKR 537 billion in July this year. According to experts, this increase reflects the steep rise in state expenditure, as reported by Dawn on Friday.

A Double-Edged Debt Trap

Pakistan currently faces a double-edged debt crisis. The entire national budget is consumed by domestic and foreign debt servicing, which absorbs all tax revenue. Consequently, the country is compelled to rely on internal borrowing for its financial survival.

Rapid Increase in Total Debt

Details reveal that Pakistan’s total debt rose to approximately PKR 69 trillion by the end of July, up from PKR 68.914 trillion in June a monthly increase of PKR 690 billion. In the previous financial year, the total debt grew by PKR 7.827 trillion.

By the end of July 2023, the country’s total debt was PKR 61.777 trillion, which increased to PKR 69.604 trillion by year-end. For 2025, the government has projected a borrowing estimate of PKR 9.3 trillion to address revenue gaps and current expenditures, as reported by Dawn News.

MUST READ: China Ends International Adoptions After 30 Years

Record Domestic Borrowing

In 2024, the Pakistani government borrowed a record PKR 8.4 trillion from the domestic banking system. These loans, intended to cover the fiscal deficit, were secured at an unprecedented interest rate of 22 percent, significantly burdening the economy.

Increase in Domestic Borrowing

The latest release from the State Bank of Pakistan, as quoted by Dawn News, shows that domestic borrowing rose to PKR 47.697 trillion by the end of July, up from PKR 47.160 trillion previously an increase of PKR 537 billion. Over the past 12 months, domestic borrowing jumped from PKR 39.016 trillion in July 2023 to PKR 47.697 trillion, an increase of PKR 8.681 trillion.

Impact on Tax Revenue and Economic Growth

The PKR 47.69 trillion in domestic debt now absorbs the entire tax revenue from July. The PMLN-led central government struggles to meet external debt repayments to avoid default, resulting in heavy taxation on domestic stakeholders. This aggressive borrowing and high taxation slash Pakistan’s development budget each year, leading to lower economic growth and higher unemployment.

Such extensive borrowing from the banking system is increasing Pakistan’s debt servicing costs, reducing fiscal space for the private sector, and constraining business activities.

(WITH INPUTS FROM ANI)

ALSO READ: Germany Rejects Carbon Credits Due To Fraud In Chinese Climate Projects


mail logo

Subscribe to receive the day's headlines from NewsX straight in your inbox