Despite efforts to reduce public debt, the government has not met the targets set by the Fiscal Responsibility and Debt Limitation (FRDL) Act. The FRDL Act mandates that the total public debt should not exceed 60% of the gross domestic product (GDP). However, the Ministry of Finance reported that the debt-to-GDP ratio reached 72.1% by the end of June 2018, and further increased to 84.8% by the end of June 2019. This increase is attributed to fiscal deficits, currency depreciation, and the accumulation of liquidity buffers.
In the fiscal year 2023-24, the federal budget deficit rose to Rs7.7 trillion, or 7.3% of GDP, more than double the prescribed limit of 3.5%. Consequently, Pakistan’s per capita debt increased by 11.3% to nearly Rs302,000 by the end of FY24.
The persistent failure to achieve these debt reduction targets raises questions about fiscal management and adherence to legislative mandates. It remains to be seen whether Parliament will exercise its oversight role to investigate the reasons behind this ongoing issue.
