Pakistan today is one of the Asian countries with a relatively high level of public debt in relation to the GDP. As of the end of 2023-24, public debt was 68.3% of the GDP in Pakistan. The corresponding magnitudes were 51% in India, 47% in Indonesia, 61% in Malaysia and 62% in Thailand.

The per capita debt burden in Pakistan was Rs 85,000 a decade ago. Now it has approached Rs 300,000. This rise in indebtedness has implied an increasing share of federal revenues being pre-empted by debt servicing. This was 34% in 2013-14. By 2023-24 it has risen to 66%.

The fundamental question is the cause of the build-up of public debt and its composition today.

The absolute increase in the size of the public debt from 2013-14 to 2023-24 is Rs 56,149 billion. It was Rs 15,989 billion in 2013-14 and rose to Rs 72,138 billion by the end of 2023-24. The annual growth rate has been as high as 15%.

The evolution of public debt as a percentage of the GDP has been very rapid. It was 57.2% of the GDP in 2013-14 and rose to the peak level of 74.9% of the GDP in 2022-23. A significant fall has occurred in the public debt to GDP ratio in 2023-24, to 68.3%. This is due primarily to the nominal stability in the exchange rate preventing, thereby a significant increase in the rupee value of external debt.

The major factors contributing to the increase in public debt of Rs 56,149 billion over the last decade are as follows in terms of the borrowing needs:

Financing the 8,263

primary deficit: billion Rs

Financing........

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