Bankrupt Pakistan’s debt crisis deepens, external debt reaches $1,200,000,000,000, total FOREX reserves…

New Delhi: Pakistan’s economic difficulties continue to worsen. By June 2025, the country’s total public debt reached ₹80.6 trillion (approximately US$286.832 billion). This figure is approximately 13 per cent higher than the previous fiscal year. This shocking information was revealed in official data released by the Ministry of Finance. According to the report, domestic debt constitutes ₹54.5 trillion (approximately US$1.2 trillion), a 15 per cent annual increase. External debt stood at ₹26.0 trillion (approximately US$1.2 trillion), reflecting the country’s foreign dependence.

Lower-than-expected GDP growth

In September 2025, the Ministry of Finance released its Annual Debt Review Report for the 2024-25 fiscal year. It clearly stated that the primary reason for this sharp increase in debt is lower-than-expected GDP growth. A significant decline in inflation slowed economic activity, impacting revenue collection.

Debt-to-GDP ratio increases

The government took several steps to reduce the fiscal deficit, such as tax reforms, spending cuts, and subsidies. However, these efforts proved insufficient in the face of weak economic growth. As a result, the debt-to-GDP ratio increased, posing a threat to the country’s financial health. Experts believe that if GDP growth does not reach 5-6 per cent, the debt burden will become unbearable. The government is now focusing on increasing exports, attracting foreign investment, and boosting industrial production. Pakistan is already under a loan programme from the International Monetary Fund (IMF). Rising debt not only challenges economic stability but also puts pressure on social services.

Pakistan’s Foreign Exchange Reserves

Pakistan’s Central Bank’s foreign exchange reserves increased by US$14 million in a week. The State Bank of Pakistan (SBP) said in a statement that the central bank’s foreign exchange reserves stood at $14.46 billion for the week ending October 17. The SBP further reported that commercial banks held net foreign exchange reserves of $5.40 billion. The country’s total foreign exchange reserves stood at $19.85 billion.