IMF warns Pakistan over rising debt burden beyond legal limit

Islamabad (Web Desk): The International Monetary Fund (IMF) has issued new guidelines regarding Pakistan’s debt situation, warning that the country continues to breach its legal borrowing limits amid rising fiscal pressure.

According to the IMF, Pakistan’s total debt has surged to 72.8% of GDP, significantly exceeding the country’s statutory ceiling of 60%.

The report highlights growing economic strain and notes that the debt trajectory is unlikely to decline substantially in the next fiscal year, with projections suggesting it may remain above 67%.

The Fund also projects that under current conditions, debt levels will stay elevated unless structural reforms are implemented.

In contrast, the Government of Pakistan has set a long-term target to reduce the debt-to-GDP ratio to 55.7% by 2034 through sustained fiscal consolidation.

The IMF has urged Pakistan to take urgent and comprehensive measures, including broadening the tax base, reducing government expenditures, and implementing decisive reforms in the energy sector to address mounting circular debt and persistent losses in the power and gas sectors.

Financial experts say the latest IMF assessment has increased pressure on the Ministry of Finance to accelerate tax reforms and phase out unnecessary subsidies in order to mitigate long-term economic risks.