76,000 Billion Record Debt, Rising Hunger, IMF Pressure: What’s Really Happening In Pakistan?

Pakistan's overall debt reached an all-time high of 76,007 billion Pakistani Rupees, painting a grim picture of the country’s financial structure. The data comes from the Economic Survey 2024–25, presented by Finance Minister Muhammad Aurangzeb on Monday, a day before the federal budget for FY 2025–26 is scheduled to be tabled in the National Assembly. Of the 76,007 billion Pakistani Rupees total public debt, 51,500 billion PKR are borrowed from domestic banks and 24,500 billion PKR from abroad, the survey reveals. This record debt accumulation raises concern against the backdrop of Pakistan's current negotiations with the International Monetary Fund (IMF) for future lending.

Despite the runaway debt, the Pakistani economy is on the "path of recovery," said Minister Aurangzeb. GDP growth, he said, from -0.2 per cent in 2023 recovered to 2.5 per cent in 2024 and is projected to creep up to 2.7 per cent in FY25. "This is a sustainable and gradual recovery in line with the world trends. The coming fiscal year will be the story of turnaround," said the minister, further stating that the global GDP growth is 2.8 per cent. The finance minister declared intentions to privatise 24 state-owned businesses (SOEs) in FY26. They had been reporting yearly losses of approximately 800 billion, which averted the fiscal burden. While exports from Pakistan hit USD 27.3 billion, imports stood higher at USD 48.6 billion, highlighting a trade deficit of more than USD 21 billion.

Poverty Rises To 45 Per Cent, Inequality Grips Nation

Contrary to the recovery story, poverty in Pakistan has increased. According to the World Bank, 44.7 per cent of the population now lives in poverty, with 16.5 per cent in extreme poverty. In April 2024, a World Bank report already cautioned that another 1.9 million Pakistanis will be pushed below the poverty line in FY25. The nation's 2.6 per cent GDP growth rate is not enough to offset the effect of a 2 per cent annual population increase, the report continued.

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The agriculture industry, which employs close to half of Pakistan's working poor, is in dire straits. The World Bank report states that crop production is to decline sharply in FY25. Cotton production may fall by 29.6 per cent, wheat production by 13.6 per cent, and rice production by 1.2 per cent. The agricultural slowdown has been worsened by unfavorable weather, a 40 per cent decline in precipitation, pest infestation, and water scarcity, particularly in Punjab. According to a CNN-News18 report, Indus River inflows into Pakistani Punjab have fallen by 15 per cent, partly because India suspended the Indus Waters Treaty. The situation has driven 10 million rural Pakistanis towards severe food insecurity, the report cautioned. The fall is blamed on scarce rainfall, pest infestation, and water shortages, particularly in Punjab. The Indus River inflowing into Pakistani Punjab reportedly decreased by 15 per cent, partly due to India's halt of the Indus Waters Treaty, based on a CNN-News18 report. Consequent to these issues, almost 10 million rural Pakistanis suffer from acute food insecurity. The World Bank also highlighted rising income inequality, with consumption-based inequality growing by 2 percentage points since FY21. It now stands at 32, though the actual figure may be higher because of underreporting among elite households.

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