As Pakistan gears up to announce its annual Budget on June 10, the government led by Shehbaz Sharif published its Economic Survey 2024-25 on Monday, June 9 — highlighting a cautious recovery amidst growing financial pressures.
Key to the government’s narrative is a projected GDP growth of 2.7% for FY25, revised down from an earlier estimate of 3.6%, indicating a more conservative outlook. This follows a slight recovery to 2.5% in FY24, after a contraction of 0.2% in FY23, as noted in the survey presented by Pakistan Finance Minister Muhammad Aurangzeb.
Indicators of stabilization: Exports, remittances, and IT sector growth
The economic survey reports a 7% increase in exports, a stronger performance in the freelance and IT sectors, and a surge in foreign remittances as critical contributors to recent macroeconomic resilience.
Pakistan’s IT exports reached $3.1 billion, with freelancers generating $400 million. Remittances grew to $38 billion, reflecting a $10-billion increase over two years, based on official statistics.
Inflation for the outgoing fiscal year is estimated at 4.6%, considerably lower than prior double-digit figures, while the policy rate has been cut from 22% to 11%, likely alleviating liquidity constraints and bolstering demand.
The survey presents these developments as signs of stabilization — albeit fragile — as the government attempts to balance growth objectives with fiscal consolidation under the scrutiny of international lenders.
Also Read: Pakistan reduces interest rate to protect economy from tariff disruptions
Debt dilemma: PKR 76 trillion and climbing
However, beneath the cautiously optimistic narrative, Pakistan’s debt situation reveals a grimmer reality.
According to the Economic Survey 2024-25, as reviewed by CNN-News18, Pakistan’s total public debt has reached PKR 76,007 billion — consisting of PKR 51,518 billion in domestic debt and PKR 24,489 billion in external debt. This signifies a substantial rise from PKR 39,860 billion in 2020-21, and nearly five times the PKR 17,380 billion recorded in 2014-15.
The report cautions: “Excessive or mismanaged debt can create serious vulnerabilities, such as increasing interest burdens, potentially undermining long-term fiscal stability and economic security if not addressed.”
It notes that Pakistan’s annual interest payments account for over 50% of federal revenues, restricting fiscal space for development or welfare initiatives.
The debt accumulation is partially fueled by ongoing borrowing under the IMF’s Extended Fund Facility, approved in September 2024 for $7 billion, with $2.1 billion disbursed thus far. Additionally, bilateral loans from China, particularly related to the China-Pakistan Economic Corridor (CPEC), are estimated at $30 billion — much of which is linked to long-term infrastructure projects, according to a Moneycontrol report.
Also Read: Pakistan cannot afford a conflict with India, warns Moody’s
Pakistan’s total external debt and liabilities are now projected at over $130 billion, representing nearly 50% of GDP, the report states.
Future outlook
With the federal budget expected to be presented on Tuesday (June 10), the government is confronted with the dual challenge of projecting economic recovery to domestic stakeholders while aligning its fiscal strategy with IMF standards. Given elevated global interest rates, a fluctuating rupee, and diminished investor confidence, Pakistan’s fiscal capacity remains constrained.
While the Economic Survey 2024-25 may outline a pathway to stability, it also clearly highlights the scale of the challenges that lie ahead.
(With Agency Inputs)
