EPBD report reveals each Pakistani owes Rs318,252 in debt

ISLAMABAD: The Economic Policy and Business Development (EPBD) has released a report highlighting the sharp rise in Pakistan’s debt burden, warning that the country is now caught in a dangerous debt trap.

According to EPBD report, every Pakistani now carries a debt of Rs318,252, compared to Rs90,047 just a decade ago — more than a threefold increase in ten years.

On average, the national debt has been growing at a rate of 13 per cent annually, effectively doubling every six years.

The report reveals that Pakistan’s loan has surged to 70.2 per cent of GDP, exceeding the 60 per cent ceiling set under the Fiscal Responsibility Act.

In contrast, India’s debt-to-GDP ratio stands at 57.1 per cent, Bangladesh at 36.4 per cent, while Sri Lanka faces the highest burden in the region at 96.8 per cent.

Debt servicing costs have also soared, with interest payments now consuming 7.7 per cent of the economy. The steep depreciation of the rupee — a 71 per cent drop since 2020 — has pushed external debt higher by 88 per cent in local currency terms, the EPBD report stated.

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The think tank cautioned that Pakistan’s limited fiscal space leaves little room for development or infrastructure investment.

It argued that imposing more taxes on an already burdened population is not a solution. Instead, it recommended expanding the tax net and reducing the policy rate from 11 percent to 9 per cent.

This step, the report said, could save the government Rs1.2 trillion in interest payments, creating fiscal space and making businesses more competitive.

The report stressed the urgent need for fiscal discipline, warning that without lowering the cost of borrowing, Pakistan risks slipping into an even deeper economic crisis.