Pakistan External Debt Rises 23% in First Two Months of Fiscal Year

News Desk
ISLAMABAD: Pakistan’s external debt witnessed a notable surge of 23.60 percent during the first two months of the current fiscal year, according to official data released by the Economic Affairs Division.
Between July and August, the federal government secured $1.70 billion in foreign loans, compared to $1.37 billion borrowed during the corresponding period of the previous fiscal year, highlighting the country’s ongoing reliance on external financing to manage its fiscal deficit and foreign exchange reserves.
The latest figures underline the critical financial balancing act currently being managed by economic policymakers.
The increased inflow of foreign funds plays a vital role in stabilizing external accounts and meeting international debt obligations, yet it simultaneously intensifies long-term debt servicing pressures on the national exchequer.
Independent economists note that while these inflows provide immediate breathing room, structural reforms remain essential to achieve sustainable economic stability.
For ordinary citizens, the mounting external debt trajectory directly translates into constrained fiscal space for public development spending and social safety nets.
As debt servicing consumes a major portion of federal revenues, inflationary pressures and indirect taxation often increase, impacting the purchasing power of the public.
Analysts maintain that prudent debt management and export-led growth are imperative to break the perpetual cycle of foreign borrowing.
Moving forward, the Ministry of Finance and economic teams are expected to closely monitor foreign debt utilization and explore avenues for non-debt-creating capital inflows. Upcoming reviews with multilateral lenders and international financial institutions will further shape Islamabad’s fiscal strategy as the government navigates its broader economic roadmap for the year.