ISLAMABAD: Pakistan’s per capita debt increased by 11.3% to nearly Rs302,000 at the end of FY24, as the government failed to adhere to the fiscal deficit limit set by the Fiscal Responsibility and Debt Limitation Act of 2005.
The Fiscal Policy Statement 2025, presented to the National Assembly on Tuesday, revealed that the federal budget deficit soared to Rs7.7 trillion, or 7.3% of GDP, more than double the prescribed limit of 3.5%.
The report attributed the rising debt to increased interest payments and exchange rate depreciation, with total public debt growing by 15% to Rs72.3 trillion. Despite the higher debt burden, the ratio of public debt to GDP decreased from 74.8% in June 2023 to 67.2% in June 2024, due to economic expansion.
Expenditure surpassed budget estimates, with mark-up payments exceeding projections by 11.7%, driven by high interest rates. However, non-mark-up expenditures remained within limits. Development spending was cut by Rs218 billion, reducing actual expenditures to Rs1.03 trillion against the budgeted Rs1.14 trillion.
While total revenues fell slightly short of targets, the report highlighted fiscal consolidation efforts, a surplus in the primary fiscal balance, and a stable exchange rate as factors contributing to economic stability. Nevertheless, current expenditures reached 105.5% of estimates due to higher debt servicing costs.
The finance ministry confirmed that the federal deficit target of 7.1% of GDP in the FY24 budget violated fiscal laws, underscoring ongoing challenges in achieving sound fiscal management.
