Pakistan’s total public debt has surged to a staggering Rs71.2 trillion as of June 2024, according to a briefing given to the National Assembly (NA) Standing Committee on Finance and Revenue on Thursday. The committee, which convened under the chairmanship of Syed Naveed Qamar, was provided with an in-depth update on the country’s debt profile, the status of the ongoing IMF programme, and the future outlook of national savings.
Debt Breakdown: Domestic vs External Debt
The federal finance minister, in an initial briefing — some of which was held in-camera due to the sensitivity of the International Monetary Fund (IMF) discussions — provided a comprehensive overview of Pakistan’s debt situation. The breakdown revealed that of the total Rs71.2 trillion public debt, Rs47.2 trillion constitutes domestic debt, while Rs24.1 trillion is external debt.
The committee members raised several pertinent questions regarding the composition and sources of the debt. The finance minister clarified that the country’s major lending partners include nations such as Saudi Arabia, China, Russia, and Australia. He further elaborated on the government’s strategy for managing this enormous debt, which includes structural reforms aimed at broadening the tax base and optimizing fiscal discipline.
“Despite the daunting numbers, the government is committed to a sustainable debt management strategy. We are working closely with our partners, including the IMF, and have initiated reforms that we believe will strengthen the economy in the long run,” stated the finance minister.
IMF Programme and Future Outlook
During the session, an update on the status of Pakistan’s IMF programme was also provided. It was confirmed that the IMF Executive Board has scheduled a meeting later this month to discuss Pakistan’s loan package, following assurances from friendly nations regarding external financing. The country is expected to receive funds in tranches after the IMF board formally approves the programme.
The committee welcomed the government’s efforts to secure international financial support, but some members voiced concerns about the conditionalities attached to IMF loans. In particular, the focus was on how the conditions might affect domestic inflation and the cost of living for ordinary Pakistanis. The finance minister reassured the committee that the government was negotiating to minimize the social impact of any austerity measures tied to the programme.
Concerns Over Tax Reforms
While acknowledging the need for fiscal discipline, several committee members raised concerns over recent tax reforms, which have caused unrest among traders across the country. Traders have voiced opposition to new tax policies, arguing that they could stifle business activity.
In response, the committee resolved to hold a separate meeting between government officials and representatives of the business community to foster dialogue and find a resolution. “We must find a middle ground where fiscal reforms do not cripple small businesses,” said one committee member.
National Savings: A Call for More Instruments
Another key agenda item discussed was the state of Pakistan’s national savings. The Director General of the Central Directorate of National Savings (CDNS) briefed the committee on the organization’s mission, current financial health, and the products it offers to the public.
With 370 centers across the country and a customer base of 3 million people, the CDNS manages 14 savings schemes, including popular products like Defence Saving Certificates and Bahbood Saving Certificates. The committee, however, expressed concerns that the national savings rate remains insufficient to support long-term economic growth.
The committee urged the government to introduce more diverse saving instruments to encourage greater public participation in national savings schemes. “We need to create an environment where savings are incentivized and accessible to a wider section of society,” emphasized the chair. The committee recommended that CDNS explore new financial products tailored to different demographic groups, including retirees, low-income families, and youth.
Foreign Exchange Reserves and Economic Stability
The finance minister also addressed the country’s foreign exchange reserves, noting that recent injections from bilateral partners have stabilized reserves, providing the government with a measure of relief. The government’s debt management strategy includes efforts to maintain a comfortable level of reserves to avoid liquidity crises and to manage future debt repayments effectively.
The committee acknowledged these efforts but highlighted the importance of developing a long-term economic plan focused on fiscal stability, rather than relying on short-term foreign loans. “We must move from firefighting mode to implementing long-lasting reforms. Only then will we achieve sustainable economic growth,” remarked Syed Naveed Qamar.
Conclusion: A Call for Strategic Planning
The session concluded with a commitment from all stakeholders to continue working on solutions to Pakistan’s growing debt problem. The introduction of more saving instruments was seen as a vital step in reducing reliance on external borrowing. The committee also called for greater engagement between the government and traders to resolve issues around tax reforms and emphasized the importance of maintaining a stable relationship with international lenders like the IMF.
As Pakistan grapples with its mounting debt, the government’s actions in the coming months will be crucial in determining the country’s economic trajectory. The focus remains on fostering public savings, ensuring fiscal discipline, and reducing the debt burden while navigating the complexities of international lending conditions.