editorial<\/a> yesterday said Pakistan\u2019s \u201cdebt dynamics continue to paint a difficult fiscal picture\u201d.<\/p>\n\u201cFor the government, the options are bleak: diverting scarce domestic resources \u2014 which would require the IMF\u2019s consent \u2014 or borrowing more to add to an already high debt mountain,\u201d it added.<\/p>\n
However, the finance ministry, \u201cwhile noting recent commentary about public debt levels\u201d, maintained in its statement that \u201cabsolute numbers, which will naturally rise with inflation, are not meaningful indicators of sustainability in isolation. The appropriate measure of sustainability is looking at debt relative to the size of the economy i.e Debt-to-GDP \u2014 not absolute rupee amounts\u201d.<\/p>\n
\u201cBy this yardstick, which is followed globally, Pakistan\u2019s position has actually improved over the last few years, with debt-to-GDP ratio declining from 74 per cent in FY22 to 70pc in FY25. At the same time, the government has reduced rollover and refinancing risks and saved taxpayers substantial interest costs,\u201d the ministry said.<\/p>\n
Detailing its approach towards debt management, the statement outlined debt-to-GDP reduction, early repayments, lower interest costs, and a stronger external account as its main focus.<\/p>\n
The ministry said this approach underscored its \u201ccommitment to macroeconomic stability, reduced risk, and responsible fiscal management\u201d.<\/p>\n
The ministry highlighted that the government, \u201cfor the first time in Pakistan\u2019s debt history\u201d, prepaid around Rs2600 billion owed to commercial and central banks before maturity. In doing so, it said, the government reduced the risks of reducing rollover and refinancing, which ultimately led to taxpayers saving \u201chundreds of billions of rupees in interest savings.\u201d<\/p>\n
\u201cSimilarly, on the fiscal side, the federal fiscal deficit stood at Rs 7.1tr in FY25, lower than Rs 7.7tr in FY24,\u201d the ministry said, highlighting that Pakistan posted a \u201chistoric primary surplus of 2.4pc of GDP, or Rs 2.7tr, for the second consecutive year\u201d.<\/p>\n
Consequently, the country\u2019s \u201ctotal debt stock rose 13pc year-on-year, below the 17pc average growth of the past five years\u201d, it said.<\/p>\n
The ministry attributed the record current account surplus of $2bn in FY25 to its \u201cprudent fiscal management.\u201d<\/p>\n
\u201cTo lower [the] interest burden, prudent liability management along with reduction in interest rate in FY25 delivered over Rs 850bn in interest expense savings compared to the budgeted amount,\u201d the statement said, noting that \u201cin the current fiscal year\u2019s budget, interest allocation is Rs 8.2tr, down from Rs 9.8tr in FY25,\u201d it added.<\/p>\n
The ministry further said that the \u201cpublic-debt average time to maturity has improved to about 4.5 years in FY25 compared to about 4.0 years last year; within this, domestic debt average time to maturity has also risen to over 3.8 years from about 2.7 years.\u201d<\/p>\n
Moreover, it said that \u201cpart of the increase in external debt reflects balance of payments support, e.g., IMF Extended Fund Facility inflows and non-cash commodity facilities such as the Saudi Oil Fund, that do not require rupee financing.\u201d<\/p>\n
\u201cApproximately, Rs 800 billion of the external debt increase is a valuation effect from exchange-rate movements, not new net borrowing,\u201d the statement said.<\/p>\n","protected":false},"excerpt":{"rendered":"The country\u2019s debt trajectory \u201cis more sustainable today than suggested by headline rupee figures\u201d, the finance ministry said…\n","protected":false},"author":2,"featured_media":20101,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,184,85,46,5540],"class_list":["post-20100","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-il","tag-israel","tag-press-release"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/20100","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=20100"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/20100\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/20101"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=20100"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=20100"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=20100"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}