Pakistan's latest debt review offers a sobering reminder of the structural weaknesses that continue to hobble the economy. The Ministry of Finance has reported that the country's total public debt surged by 13% to Rs80.6 trillion in FY25, with the debt-to-GDP ratio climbing to 70% from 68% in the previous year. This rise, despite an ostensible attempt at fiscal consolidation, truly reflects how fragile economic recovery remains when growth lags and deficits persist.

The key driver of this debt spiral is the fiscal deficit, which stood at Rs7.1 trillion, largely financed through domestic borrowing. While the share of external debts in the overall stock declined to 32%, reducing some currency risk, this came at the cost of piling pressure on domestic markets through heavy issuances of Pakis

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