Over the past fifteen years, Pakistan’s federal budget has ballooned in size, but not necessarily in wisdom. From 2009–10 to 2025–26, the national budget has grown nearly sevenfold in nominal terms. But a troubling story unfolds under the surface—the lion’s share of that growth is being swallowed by interest payments on debt, leaving little room for investments that actually move the needle on development.
Debt servicing is projected to consume 46.7% of the federal budget in 2025–26, with PKR 8.21 trillion earmarked for interest payments—while development spending (PSDP) stands at just PKR 1 trillion. The government is caught in a debt spiral where borrowing begets more borrowing, and interest costs cannibalize public finances. The effects are visible in potholes that don’t get fixed, schools that don’t get built, and hospitals that remain understaffed.
Read the full article on Business Recorder (Published 2 July 2025).