Pakistan’s economy shows flickers of recovery through rising remittances, exports, and IT gains — but beneath the surface, a towering PKR 76 trillion debt load and slower growth expose fiscal fault lines.
As Pakistan prepares to unveil its annual Budget on June 10, the Shehbaz Sharif-led government released its Economic Survey 2024-25 on Monday, June 9 — offering a snapshot of cautious recovery amid mounting financial stress.
At the centre of the government’s narrative is a projected GDP growth of 2.7% for FY25, down from an earlier estimate of 3.6%, reflecting a more tempered outlook. This follows a modest rebound to 2.5% in FY24, after the economy contracted by 0.2% in FY23, according to the survey presented by Pakistan Finance Minister Muhammad Aurangzeb.
Signs of stabilisation: Exports, remittances and IT growth
The economic survey outlines a 7% increase in exports, improved performance in the freelance and IT sectors, and a rise in foreign remittances as the key drivers of recent macroeconomic resilience.
Pakistan’s IT exports touched $3.1 billion, with freelancers contributing $400 million. Remittances rose to $38 billion, reflecting a $10-billion increase in two years, according to official figures.
Inflation for the outgoing fiscal year has been estimated at 4.6%, significantly lower than previous double-digit readings, while the policy rate has been reduced from 22% to 11%, potentially easing liquidity constraints and stimulating demand.
The survey presents these as signs of stabilisation — even if fragile — as the government looks to balance growth imperatives with fiscal consolidation under the watchful eye of international lenders.
Debt spiral: PKR 76 trillion and rising
But behind the cautiously upbeat narrative, Pakistan’s debt profile paints a more sobering picture.
Reviewed by CNN-News18, according to the Economic Survey 2024-25, Pakistan’s total public debt now stands at PKR 76,007 billion — comprising PKR 51,518 billion in domestic debt and PKR 24,489 billion in external debt. This marks a dramatic rise from PKR 39,860 billion in 2020-21, and nearly five times the figure of PKR 17,380 billion in 2014-15.
The report warns: “Excessive or poorly managed debt can pose serious vulnerabilities, such as rising interest burdens and can undermine long-term fiscal sustainability and economic security if left unaddressed.”
Pakistan’s annual interest payments, it notes, consume over 50% of federal revenues, leaving little fiscal room for development or welfare.
The debt build-up is driven in part by ongoing borrowing under the IMF’s Extended Fund Facility, approved in September 2024 for $7 billion, of which $2.1 billion has been disbursed so far. Additionally, bilateral loans from China, particularly under the China-Pakistan Economic Corridor (CPEC), account for an estimated $30 billion — much of it tied to long-term infrastructure projects, a Moneycontrol report highlighted.
Pakistan’s total external debt and liabilities are now estimated at over $130 billion, amounting to nearly 50% of GDP, the report shows.
Looking ahead
With the federal budget being tabled on Tuesday (June 10), the government faces the twin challenge of projecting recovery to domestic stakeholders while aligning its fiscal path with IMF benchmarks. With global interest rates elevated, a volatile rupee, and limited investor confidence, Pakistan’s fiscal room remains narrow.
The Economic Survey 2024-25 may lay out a roadmap for stability — but it also makes clear the magnitude of the risks that lie ahead.
