Pakistan’s total debt has surged fourfold over the past ten years, according to an official report by the Ministry of Finance. The report reveals that the country’s debt-to-GDP ratio climbed from 60% in 2016 to 71% in 2025.
In the current fiscal year, 89% of the federal government’s net income was spent on debt servicing, while in 2023, the figure had peaked at 120%. The documents further show that Pakistan’s domestic debt increased from Rs13.6 trillion in 2016 to Rs54.5 trillion in 2025, while external debt rose from Rs6 trillion to Rs26 trillion during the same period.
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Alarmingly, 89% of debt servicing costs went toward interest payments, with only 11% used to repay the principal amount. The ministry warned that without fiscal discipline, the debt-to-GDP ratio could reach 85% by 2035.
Separately, the International Monetary Fund (IMF) released its Fiscal Monitor Report 2025, which projects a gradual decline in Pakistan’s debt ratio — from 71.6% in 2024 to 71.3% in 2025, and down to 60.2% within five years. However, the IMF also cautioned that Pakistan’s fiscal deficit may rise to 4.1% of GDP this year, exceeding the 3.9% target, before easing to 2.8% over the next five years.
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