Federal debt burden soars: Pakistan faces 15% increase in total loans

The total loan on Pakistan has escalated significantly over the past year, with the State Bank of Pakistan (SBP) reporting a 15% increase in the federal government’s debt from May 2023 to May 2024, reported 24NewsHD TV channel Friday.

This surge in debt suggests that the populace should brace themselves for additional taxes as the government grapples with its burgeoning financial obligations.

According to the SBP, the total loan on Pakistan increased by a staggering 8,852 billion rupees within one year. By May 2024, the total loan on Pakistan had soared to an unprecedented 67,816 billion rupees, compared to 58,964 billion rupees in May 2023.

The State Bank has released comprehensive statistics on government debt, painting a clear picture of the nation’s financial challenges. As of April 2024, the federal government’s total debt stood at 66,086 billion rupees, highlighting a consistent upward trend.

The data reveals that local loans have reached a record level of 46,208 billion rupees. In contrast, the external debt of the federal government experienced a slight decline of 1.4% over the same period, decreasing from 21,908 billion rupees in May 2023 to 21,608 billion rupees in May 2024.

The annual loan through Naya Pakistan Certificates also saw a significant decrease of 37.51%, dropping to 87 billion rupees. This reduction in one of the government’s key borrowing instruments indicates potential challenges in attracting investment.

The rising debt levels show the government’s reliance on borrowing to meet its financial needs, which has direct implications for economic policy and public finance. As the loan on Pakistan increases, the government may be compelled to introduce new taxes or enhance existing ones to manage the fiscal deficit and ensure debt servicing.

Economic analysts warn that this situation could lead to increased financial pressure on the general population, particularly as the cost of living continues to rise.

The combination of higher taxes and inflation could erode disposable incomes, affecting consumer spending and overall economic growth.

The total loan on Pakistan highlights the urgent need for sustainable fiscal policies and effective debt management strategies. As the government navigates these challenges, it will need to balance fiscal discipline with measures that promote economic stability and growth.