Pakistan's economic situation has significantly deteriorated, marked by a substantial increase in government debt. In the first eight months of the current fiscal year, the federal government's debt surged by PKR 4,304 billion (PKR 36,548 Crores), bringing the total to PKR 69.114 trillion as of October 2024. This rise is attributed mainly to domestic borrowing, which increased by PKR 4,556 billion, while foreign debt saw a slight reduction of PKR 251 billion during the same period.

Key Economic Indicators

Total Debt: PKR 69.114 trillion (as of October 2024)

Domestic Debt: PKR 47.231 trillion

Foreign Debt: PKR 21.884 trillion

Debt Increase: PKR 6,392 billion from September 2023 to August 2024

Contributing Factors

Pakistan's economy has been under severe stress due to a combination of high inflation, political turmoil, and structural inefficiencies. The inflation rate remains one of the highest in Asia, exacerbating public discontent and economic challenges.

To address its financial crisis, Pakistan secured a $7 billion bailout package from the International Monetary Fund (IMF) in September 2024. This marks the country's 25th engagement with the IMF since independence in 1947, underscoring its reliance on international financial assistance.

Despite recent stabilization efforts, including a predicted economic growth recovery to 2.5% for FY24, concerns remain about long-term debt sustainability and economic reforms necessary for stability and growth.

The surge in Pakistan's government debt highlights the ongoing economic challenges facing the country. While immediate measures have been taken to stabilize the economy through international loans, significant risks persist regarding fiscal health and public unrest due to high inflation and unemployment rates.