Tabadlab Report: Pakistan’s Debt Spiral and Urgent Need for Transformational Change

Pakistan is facing an unsustainable debt crisis, according to a report by Islamabad think tank Tabadlab. The quantum of debt is outpacing the country’s economic output growth, constraining its ability to expand.

The report warns of an impending default unless sweeping reforms are implemented, characterizing the debt challenge as formidable and existential. Debt repayments are at a historic high, diverting resources from crucial sectors such as social protection, education, health, and climate change.

Pakistan’s debt accumulation, primarily used for a consumption-focused and import-dependent economy, is deemed alarming and unsustainable. The report emphasizes the need for immediate and strategic interventions to address the depth of the crisis and highlights the interplay between climate vulnerability and debt.

In FY-2024, Pakistan faces an estimated $49.5 billion in debt maturities, raising concerns about the country’s financial stability.