ISLAMABAD: Pakistan’s per capita debt rose by 11.3% to nearly Rs 302,000 at the end of fiscal year 2024, as the government failed to adhere to the fiscal deficit limit set by the Fiscal Responsibility and Debt Reduction Act, 2005.
The 2025 Fiscal Policy Statement, submitted to the National Assembly on Tuesday, revealed that the federal budget deficit rose to 7.7 trillion rupiah, or 7.3% of GDP, more than double the prescribed limit of 3.5%.
The report attributed the rise in debt to increased interest payments and the decline in the exchange rate, with total public debt growing by 15% to 72.3 trillion rupees. Despite the high debt burden, the ratio of public debt to GDP fell from 74.8% in June 2023 to 67.2% in June 2024, due to the economic expansion.
Expenditures exceeded budget estimates, with profit margin payments exceeding expectations by 11.7%, driven by higher interest rates. However, non-margin expenses remained within limits. Development spending was cut by 218 billion rupees, bringing actual expenditure down to 1.03 trillion rupees against the budgeted 1.14 trillion rupees.
While total revenues fell slightly short of targets, the report highlighted fiscal consolidation efforts, the primary fiscal balance surplus, and exchange rate stability as factors contributing to economic stability. However, recurrent expenditures were 105.5% of estimates due to higher debt servicing costs.
The Ministry of Finance confirmed that the federal deficit target of 7.1% of GDP in the fiscal year 2024 budget violates financial laws, highlighting the continuing challenges in achieving sound financial management.