Senate panel raises concerns over rising debt burden, backs Debt Office reforms

The Senate Standing Committee on Finance and Revenue expressed concern over Pakistan’s rising debt burden while reviewing proposed amendments aimed at strengthening the government’s Debt Management Office through enhanced institutional capacity and resources.

During deliberations on the proposed amendments to the Fiscal Responsibility and Debt Limitation law, committee members questioned the effectiveness of the Debt Management Office amid continued growth in public debt.

“We should review whether there is even a need for the Debt Office or not, as the debt graph has increased massively,” members observed during the meeting.

Minister of State for Finance Bilal Azhar Kayani defended the proposed reforms, saying there was a need to upgrade the capacity of the Debt Management Office to improve planning and execution of debt management operations.

Kayani also said the federal budget for FY2026-27 was expected to be presented in the first week of June.

He informed the committee that against an allocation of Rs9.7 trillion for debt servicing during the previous fiscal year, actual expenditure stood at Rs8.9 trillion, resulting in savings of Rs800 billion.

According to the minister, the government has allocated Rs8.2 trillion for debt servicing in the outgoing fiscal year and expects servicing costs to decline further due to lower interest rates and retirement of a portion of public debt.

The committee unanimously recommended “The Fiscal Responsibility and Debt Limitation (Amendment) Bill, 2026” for passage by the Senate and also directed that the appointment of the Director General (Debt) be made on a priority basis.

However, the committee maintained reservations regarding the pace of debt accumulation and stressed the need for stronger fiscal oversight and prudent debt management.

The meeting, chaired by Senator Saleem Mandviwalla, was attended by Senator Muhammad Talha Mahmood and Senator Muhammad Abdul Qadir.

The committee also reviewed “The Export-Import Bank of Pakistan (Amendment) Bill, 2026” and was briefed on the organisational structure and governance framework of the state-owned export-import bank.

Officials informed the panel that the bank’s board would include two government nominees while the remaining members would come from the private sector.

The proposed amendments introduce definitions for ex officio and independent directors and incorporate provisions related to the State-Owned Enterprises Act.

After discussion, the committee unanimously recommended the bill for Senate approval.