The debt crisis of Pakistan is one of the major economic and financial problems which is facing by the nation of Pakistan since its independence in 1947.
Just after the independence in 1947, Pakistan has faced severe financial and economic crisis due to the emergence of a new state. And at the time of independence, there were lots of social, political, economic, and financial issues which have faced the newly created state of Pakistan.
There was no institutionalization, economic stability, and financial institutions in Pakistan. On the other side, in the major establishment of institutions was in India. Therefore, India has not faced as much problem as faced by the Pakistan.
Why the debt crisis of Pakistan was started?
The debt crisis of Pakistan was started because it was a new state. No focus was made on the economic stability and economic growth since its birth. Moreover, political deadlock and political crisis is another major reason of debt crisis of Pakistan because political crisis has created uncertainties and low economic growth which further resulted in the low income and high expenditures. Resultantly, to meet the expenditure of the nation and country, Pakistan has to continuously be dependent on the foreign and local debts.
What is the current foreign debt of Pakistan?
According to the Finance Ministry of Pakistan, the current debt crisis of Pakistan in May 2026 is more than 97 trillion rupees. This has plunged the country into a deep debt crisis and vicious circle of poverty. Moreover, this public debt has exceeded 70% of the Gross Domestic Product.
Due to this debt crisis, the budget position and economy of Pakistan has faced severe problems. Every year there is a budget which is a deficit budget because Pakistan has to pay a huge amount of billions of dollars every year in respect of interest on debt which is paid to the foreign financial institutions like World Bank and IMF.
