Islamabad: Pakistan’s per-person debt has surged to nearly Rs302,000, marking an 11.3% increase over the past fiscal year. The latest Fiscal Policy Statement for 2025 reveals that the government failed to keep the budget deficit within the legal limit, exceeding Rs7 trillion.
Debt Burden Escalates
The per capita debt burden in Pakistan has risen from Rs271,264 in fiscal year 2023 to Rs301,954 in fiscal year 2024, an increase of Rs30,690. This sharp increase highlights the growing economic strain on the average citizen. According to the finance ministry’s report, the total public debt also jumped by nearly 15%, climbing from Rs62.9 trillion to Rs72.3 trillion. This rise in debt is attributed to higher interest payments and the depreciation of the exchange rate. However, in terms of GDP, public debt decreased from 74.8% to 67.2%.
Budget Deficit Overshoots Legal Limit
The government’s failure to adhere to fiscal responsibility guidelines is evident in the budget deficit numbers. The deficit for fiscal year 2024 stood at 7.3% of the GDP, more than double the legal limit of 3.5% prescribed by the Fiscal Responsibility and Debt Limitation Act of 2005. The actual deficit exceeded the target by Rs4 trillion, totaling Rs7.7 trillion. Despite the deficit being slightly above the target of 7.1% set in the June 2023 budget, it still violated the law’s core fiscal principles.
Government’s Financial Struggles
The finance ministry’s report points to several financial challenges contributing to the fiscal imbalance. The federal government exceeded budget estimates for current expenditures, particularly due to rising interest rate mark-up payments. However, non-mark-up expenditure remained within the limits. The report also highlighted a slight shortfall in total revenues, which further contributed to the deficit. Although inflation eased, the government’s expenditures surpassed the budget, and development spending was also cut by Rs218 billion, reducing the budgeted Rs1.14 trillion to Rs1.03 trillion. Despite these struggles, the government reported a stable exchange rate and a small current account deficit.
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