10 years ago, every citizen owed Rs 90,047. During this period, the debt of every citizen has more than doubled, with an average annual increase of 13 percent in debt
Pakistan is trapped in a dangerous debt trap, due to high interest rates, and interest payments on loans have reached 7.7 percent of the economy
Commerce reporter, Daily Dawn, Dawn TV report
London: Economic think tank Economic Policy and Business Development has released a report on rising debt, according to which every citizen of Pakistan owes Rs 318,252. 10 years ago, every citizen of Pakistan owed Rs 90,047; during this period, the debt of every citizen has more than doubled.
The report issued by the Economic Policy and Business Development says that Pakistan’s debt burden has increased to a dangerous level, with every citizen of Pakistan owing Rs 318,252.
The report further said that 10 years ago, every citizen of Pakistan owed Rs 90,047, and Pakistan’s debt burden is increasing by an average of 13 percent annually.
The report says that Pakistan’s debt has reached 70.2 percent of the economy, which is higher than other countries in the region, which are India’s 57.1 percent and Bangladesh’s 36.4 percent.
According to the think tank, Pakistan has fallen into a dangerous debt trap, with interest payments on loans reaching 7.7 percent of the economy due to high interest rates.
According to the report, due to the 71% depreciation of the rupee since 2020, external debt has increased by 88% in local currency, Pakistan’s debt has exceeded the limit set by its own Fiscal Responsibility Act by 10%, and debt repayments have reached almost eight percent of the economy.
The think tank further said in the report that imposing more taxes on the already burdened people is not a solution; there is a need to expand the tax net and reduce interest rates.
The report says that if the policy rate is reduced from 11% to 9%, the interest cost on the government’s debts can be reduced by 1.2 trillion rupees. This will increase financial capacity, and businesses will also be more competitive.
According to the think tank, Pakistan must immediately adopt fiscal discipline, and the government must reduce the cost of borrowing; otherwise, the country will face a more serious crisis.
The report further states that the government does not have the financial capacity for development expenditure, leaving little financial capacity for infrastructure investment or rehabilitation projects.
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