With a total public debt of over PKR 76 trillion (roughly $267 billion), or nearly 65% of total income (i.e., GDP), Pakistan’s economy is in a crippling debt trap. Although this debt-to-GDP ratio is slightly lower than last year, it continues to strain the country’s fiscal space in subtler but persistent ways.

The government has been forced to repeatedly seek bailouts from the International Monetary Fund (IMF) due to the crippling constraints imposed by this debt load. This pattern has become all too familiar, as Pakistan has participated in 24 IMF programmes since 1958.

Pakistan’s dependence on the IMF has reached a critical juncture. The prevailing $3 billion Standby Arrangement (SBA), which was approved in 2023, carries tough stipulations that are significantly affecting the structure of Budget 2025–2026.

These requirements include tax reforms, austerity measures, and the privatization of state-owned businesses. It turns out that Pakistan’s debt crisis has so severely undermined its economic sovereignty that its national budget needs what amounts to external authorization, raising serious concerns about the country’s ability to steer its economy.

Decades of fiscal mismanagement, lax tax administration, and an unsustainable spending pattern have been the main causes of........

© Business Recorder