Pakistan’s Debt Interest Payments Exceed Defence and Development Budgets
ISLAMABAD:Pakistan’s interest payments on public debt have surpassed both defence and development spending, with total payments estimated at Rs8 trillion for the current fiscal year.
The rising cost of debt servicing has emerged as a serious threat to the country’s financial system. Interest payments on domestic and external debt consume a substantial portion of the government’s tax and non-tax revenues each year.
According to estimates, annual interest payments could reach Rs10 trillion by 2030-31. After meeting debt servicing obligations, the federal government is expected to be left with only Rs3 trillion for other expenditures.
Despite efforts to reduce the fiscal deficit in coordination with the provinces, interest payments on Pakistan’s domestic and external debt are likely to remain high over the medium term.
As a result, a significant share of national resources will continue to be allocated to servicing public debt, limiting the funds available for other government priorities.
The increase in interest payments is partly attributed to the continued growth in the country’s overall debt burden.
Clarify the budget comparisonTighten repetitive debt-servicing points
