Pakistan Tehreek-e-Insaf (PTI) leader Salman Akram Raja warned that Pakistan’s reliance on borrowing to fund state operations is unsustainable and threatens long-term economic stability. Speaking at a seminar, Raja argued that the nation’s current debt levels have surged to match the total borrowing accumulated over previous decades, creating a cycle that limits public welfare and development spending.
Why the current debt level is a concern
According to Salman Akram Raja, the national debt has increased sharply over the last four years. He characterized this growth as a matter of serious concern, noting that a significant portion of federal expenditures is now consumed by debt servicing. Because rising interest payments and fixed obligations take priority, the government faces reduced fiscal space to fund essential infrastructure expansion and public welfare initiatives.
Can structural reforms change the economic outlook?
Raja stated that Pakistan’s economic challenges cannot be resolved without fundamental changes to the underlying financial system. He argued that even well-planned budgets remain ineffective if the structural foundation of the economy is not reformed. Without these meaningful changes, he cautioned, the country’s economic difficulties are likely to deepen as the reliance on loans continues.
What may happen next for the economy
If the current policy of running state affairs through loans persists, analysts and observers suggest the following potential outcomes based on Raja’s assessment:
- Reduced development: The government may continue to struggle to finance new infrastructure projects as debt servicing costs consume a larger share of the budget.
- Fiscal constraints: Public welfare initiatives could remain underfunded due to the pressure of fixed financial obligations.
- Increased instability: Without comprehensive structural reforms, the economy may face continued pressure, making long-term recovery difficult to achieve.