Pakistan’s economy is addicted to debt. Lavish government spending, recklessly financed through borrowing has resulted in a precarious debt trap, a depreciated rupee, escalating inflation, and an economy on the brink.

The comfortable narrative of easing inflation obscures a far more dangerous reality. Like an individual who indulges in extravagant spending using multiple credit cards, confident that future income will cover the mounting debts, Pakistan continues unchecked borrowing. Month after month, the borrowing continues.

And when the bills arrive, only the minimum amount due is paid, with the nation congratulating itself for staying afloat while the interest charges balloon in the background. This isn’t just a cautionary tale; it’s a chillingly accurate reflection of Pakistan’s fiscal trajectory over the past decade.

Successive administrations have perpetuated this cycle, amassing substantial debt at the expense of economic stability.

The PML-N government (2013-2018) borrowed PKR 10.66 trillion, primarily for infrastructure projects that failed to generate commensurate economic growth. The PTI administration (2018-2022) escalated borrowing by an additional PKR 14.92 trillion, predominantly through domestic channels, inflating the money supply and stoking inflation.

The PDM and caretaker governments (2022-present) have added PKR 13.64 trillion in just two years, an unprecedented rate of accumulation, pushing Pakistan’s total debt beyond PKR 74.6 trillion (USD 254 billion) by the end of June 2024. This relentless borrowing, devoid of substantial economic reforms, has precipitated one of the most severe inflationary periods in the nation’s history. It’s like taking out a payday loan to cover a credit card bill—a temporary fix with devastating long-term consequences.

The government’s strategy of maintaining high interest rates to stabilise the rupee against the dollar, while simultaneously relying on domestic borrowing to finance fiscal expenditures, has created a perfect storm.

Interest payments are skyrocketing, fueling inflation. As of September 2024, domestic debt constituted 66.2 percent of Pakistan’s total public debt, with approximately 74 percent of this debt linked to floating interest rates. This structure exposes the economy to significant interest rate risks, as rising rates escalate debt servicing costs.

In the first nine months of FY2024, interest expenses on domestic debt reached Rs........

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