Pakistan under burden of ...of external debt, misses most growth targets, increases defence budget by...

Though it is not yet clear how much money has been allocated for defence in Pakistan's Budget 2025-26, presented in the National Assembly on Tuesday, earlier the government had endorsed an 18%  increase in defence spending. This has come at a time when the Pakistan government has said in its Economic Survey 2024-25 that the public debt stands at a staggering PKR 76 trillion or about  $269 billion. It includes Rs 51.5 trillion in domestic debt and Rs 24.4 trillion in external liabilities, owed to international lenders like the International Monetary Fund and China.

Most expenditure on debt

The burden of the debt can be gauged by the fact that the majority of the government expenditure was on domestic debt, which accounted for Rs 5.78 billion or 66% of the annual allocation of Rs 8.74 trillion. The interest payments on external debt reached Rs 656 billion, equivalent to 63% of the budgeted Rs 1.04 trillion.

Pakistan Economic Survey

According to the Economic Survey 2024-25, external public debt was recorded at $87.4 billion at the end of March 2025. It increased by around $883 million during FY25 compared to an increase of $2.6bn during the same period of the last fiscal year. 

IMF Loan

According to the Dawn, Pakistan’s total external public debt consists of two components: government external debt and debt obtained from the IMF. While government external debt, primarily from China, amounts to $79.13 million, debt from the IMF stands at $8.23 million. The IMF debt consists of the federal government debt of $3.88m and the central bank debt of $4.39m.

Yield of crops fall

Admitting the missed targets, primarily due to the debt-servicing burden, Pakistan's Finance Minister Muhammad Aurangzeb said that the yield of major crops has come down 13.5%, and this restricted the overall GDP growth rate by 0.6%. The overall agriculture sector, which accounts for nearly 24% of GDP, registered a growth of 0.6% this year. The yield of crops like wheat, cotton, and maize contracted by 13.5%.