New record of poverty - each Pakistani owes ₹3.3 lakh as debt hits $286B
Pakistan’s total public debt has skyrocketed to a record USD 286.832 billion (PKR 80.6 trillion) as of June 2025, marking a 13 per cent increase from the previous year. The official data shows that domestic debt stands at PKR 54.5 trillion, while foreign debt has climbed to PKR 26 trillion, pushing the country’s debt-to-GDP ratio to around 70 per cent.
This marks yet another year of uncontrolled borrowing under the government of Prime Minister Shehbaz Sharif, which has continued to rely on loans to sustain basic fiscal functions instead of implementing economic reforms. Slower GDP growth, higher borrowing, and rising inflation are combining to create a financial time bomb for the country.
A Nation Drowning in Debt
The numbers translate into an alarming picture for ordinary Pakistanis. With a population of about 242 million, each citizen now carries a debt burden of roughly USD 1,186, or about PKR 333,000. In other words, every Pakistani, including children, is effectively indebted to the tune of over three lakh rupees, a staggering amount for a nation where average monthly incomes barely cross PKR 30,000.
Economists warn that such levels of debt are unsustainable given Pakistan’s current revenue base and slow economic growth, which hovers around 2 per cent, barely above population growth.
Military Overshadow and Misuse of Funds
Experts argue that Pakistan’s persistent crisis is not merely economic but structural and political, deeply tied to the military’s overarching influence over national decision-making. Despite a civilian façade, major policy and budget priorities are still driven by the military establishment.
Instead of directing borrowed funds toward infrastructure, education, healthcare, and job creation, successive governments, under pressure from or aligned with military leadership, have diverted enormous sums to defense budgets. Billions are routinely allocated for internal security operations and military procurement, while development projects remain stalled or underfunded.
Analysts note that the number of declarations of military operations and internal crackdowns now exceeds new developmental initiatives, reflecting how governance has become militarized at the expense of national progress. This military-first spending pattern has left little fiscal room for social welfare or economic rejuvenation, deepening poverty and inequality.
Corruption, Fiscal Irresponsibility, and Weak Oversight
Compounding the crisis is Pakistan’s rampant corruption and institutional decay. The Corruption Perceptions Index 2024 ranks Pakistan 135th out of 180 countries, underlining the deep-rooted misuse of public resources. From inflated infrastructure contracts to ghost employees in government departments, the state machinery remains riddled with inefficiency.
The power sector’s circular debt, now exceeding PKR 2 trillion, stands as a testament to years of poor management, cronyism, and lack of accountability. While ordinary citizens face high electricity tariffs and load-shedding, politically connected entities continue to escape responsibility.
A Recipe for Collapse
Pakistan’s economic trajectory today represents a textbook case of fiscal failure. High debt, minimal growth, corruption, and military-dominated policymaking have combined into a perfect storm. Without immediate and genuine reforms, rooted in transparency, civilian control over spending, and long-term fiscal planning, the country risks default, hyperinflation, and prolonged economic stagnation.
The IMF has already warned that Pakistan faces external debt repayments exceeding USD 100 billion by 2028, including USD 30 billion in FY 2025 alone. With foreign reserves hovering near USD 8-10 billion, the government’s ability to service this debt remains in serious question.
Pakistan’s economy today resembles a crumbling structure held up by foreign loans, weak governance, and military overreach. Every new loan deepens the pit rather than building a ladder out of it. Unless Islamabad reins in corruption, restores fiscal discipline, and shifts spending away from military ambitions toward real national development, Pakistan will continue to sink further into debt, poverty, and dependence.