Pakistan's Ballooning Debt Raises Alarms over Default Risk and Economic Stability

Pakistan's debt levels have surged dramatically since 2011, with external debt doubling to $125 billion and domestic debt rising over 6 times. Interest payments now consume a record share of GDP.

The country faces an estimated $49.5 billion debt maturity in 2024, with 30% as interest payments, intensifying concerns over debt sustainability.

Majority of debt fueled a consumption-driven, import-heavy economy lacking investment in productive sectors. The growing population needs increased funding for social services and climate adaptation.

Without transformative reforms, Pakistan risks an inevitable default, potentially triggering an economic downward spiral, warns Islamabad-based think tank Tabadlab.

The economy's growth is constrained by rising debt servicing, which prioritizes consumption over productive investment. Strategic interventions are critical to avert disaster.