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Pakistan's Debt Crisis Threatens Growth, Jobs, and Future Generations

Pakistan's central government debt increased by nearly 10% or over Rs 7 trillion, a surge largely driven by domestic borrowing. This trend risks diverting critical resources away from private investment, job creation, and public services, threatening the country's economic future. The report warns that high debt servicing costs force the state into fresh borrowing just to meet existing obligations, creating a dangerous cycle. Furthermore, heavy reliance on expatriate remittances and repeated IMF bailouts, totaling 26 programs since 1958, masks systemic failures like idle factories and high unemployment.

Key Points: Pakistan's Debt Surge Risks Investment and Job Creation

  • Central govt debt rose by Rs 7 trillion
  • Debt surge driven by domestic borrowing
  • High debt servicing costs drain resources
  • Reliance on remittances and IMF aid masks economic failures
  • 26 IMF programs since 1958 highlight aid dependence
2 min read

Rising debt threatens Pakistan's growth, job creation: Report

Report warns Pakistan's rising government debt diverts resources from private investment and job creation, creating a dangerous economic trap.

"Without a relatively quick resolution, debt management will cannibalise resources available for private investment and job creation, leaving us with a future of crushed dreams. - The Express Tribune"

New Delhi, March 13

Pakistan's central government debt rose by over Rs 7 trillion in 2025 marking an increase of nearly 10 per cent - a trend that risks diverting resources away from private investment, job creation and public services, a report said on Friday.

An editorial in The Express Tribune warned that at the current rate Pakistan will become "a perennial contender for the world's worst-run country," without a quick resolution.

"Without a relatively quick resolution, debt management will cannibalise resources available for private investment and job creation, leaving us with a future of crushed dreams," the report said.

The surge in Pakistan's debt has been driven largely by domestic borrowing, as the cash‑strapped government turned to local markets to fill fiscal shortfalls even while external debt remained largely in check.

The unchecked pace of rising debt should alarm every Pakistani as the state is becoming economically unviable for future generations despite rosy promises by politicians, it argued.

Rising short‑term borrowing has made debt servicing more expensive and leaving the state dependent on fresh borrowing to meet maturing obligations, the report noted.

"For the broader economy, it also means less money is available for private investment, as banks and other financial institutions will prefer investing in government bonds rather than riskier investments in industries or entrepreneurs," the media house said.

Another recent report said Pakistan has locked itself into a "dangerous economic trap" by prioritising short‑term expatriate remittances and foreign aid over productive development.

Remittances now account for nearly 10 per cent of GDP and rival export earnings, masking failures of the system such as idle factories, high unemployment and underutilisation of productive workforce, it noted.

Since 1958, Pakistan has entered 26 IMF programs, the highest globally, totalling over $34 billion, with the latest $7 billion Extended Fund Facility in 2024 extended into 2025-26, the report said, highlighting the country's ballooning aid dependence.

- IANS

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Reader Comments

P
Priya S
"Crushed dreams" is such a powerful and sad phrase. The youth there must be so frustrated. It highlights why strong institutions and fiscal discipline are non-negotiable for any country's future. 🇮🇳
R
Rohit P
26 IMF programs! That's a record no country should be proud of. It shows a complete failure to build a self-sustaining economy. Relying on remittances and aid is like building a house on sand.
S
Sarah B
Reading this from a development perspective. When banks prefer govt bonds over lending to businesses, entrepreneurship dies. This creates a vicious cycle of no jobs and more poverty. A lesson for all developing economies.
V
Vikram M
The report is brutally honest. "Economically unviable for future generations" – politicians everywhere make rosy promises, but the bill comes due eventually. Hope for the sake of common citizens that corrective measures are taken.
K
Karthik V
While the situation is concerning, we must be careful not to appear like we are celebrating a neighbour's difficulties. A stable and prosperous neighbourhood is in everyone's interest. This is more a case study in economic policy pitfalls.

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