Pakistan finds itself in a precarious fiscal position: the country’s government debt-to-GDP ratio hovers around 80 %, according to official and independent sources. Although precise global ranking data is fragmented, assorted lists imply Pakistan lies near the 33rd most indebted country by certain metrics—a level that places it behind major economies such as United States and even India.
Key figures and context
- Pakistan’s external debt (money owed to foreign lenders) stood at around US$130–135 billion by end-2024.
- On the debt-to-GDP front, Pakistan’s gross government debt is estimated at about 80% of GDP in 2024, and projected around 74–77% in coming years unless major reform occurs.
- By contrast, for many economies, high ratios of debt are seen as markers of fiscal stress; Pakistan’s level is high for an emerging-market economy and underscores structural vulnerability.
What this means for Pakistan
With debt at such elevated levels, Pakistan has reduced fiscal “head-room” or flexibility. Some of the implications:
- The government must allocate large portions of revenue to service existing debt (interest and principal), reducing funds available for development, infrastructure, and public services.
- A high debt-to-GDP ratio increases the risk of loss of investor confidence, potential rating downgrades and higher cost of borrowing. Indeed, assuring creditors and markets becomes more difficult.
- Domestic banking systems may become over-exposed. In Pakistan’s case, banks’ heavy investment in government securities has drawn scrutiny, as pointed out by international observers.
- It limits fiscal policy — when a country is already carrying high debt, options to stimulate growth in downturns or absorb shocks become narrower.
Why the ranking matters
Saying Pakistan is “33rd in global debt” serves as a shorthand for signalling: “We’re among the more heavily indebted countries worldwide.” Whether this is strictly accurate depends on how one defines “debt” (external, total government, debt-to-GDP) and what year the data refer to. But the message is clear: Pakistan is not a low‐debt outlier. It is comparatively exposed.
Comparisons with US and India
- The United States — though its absolute debt is enormous — benefits from currency reserve status, deep capital markets and ability to borrow cheaply.
- India, meanwhile, boasts a lower debt-to-GDP ratio than Pakistan (though still high by global standards) and is seen as having stronger growth momentum.
By positioning Pakistan behind these economies in the debt-league table, it emphasises that heavy borrowing is a serious constraint for a country whose economic engine needs to run faster.
The road ahead
For Pakistan to shift from “high-debt” to “managed-debt” status, multiple levers must be pulled: strengthening revenue collection, reducing non-productive expenditures, restructuring borrowing away from expensive short-term loans, and improving growth so that debt grows more slowly in relation to GDP. Analysts such as those at the Atlantic Council note that weak tax-to-GDP ratio and fiscal inefficiencies remain key obstacles.
In short: Pakistan’s ranking in global debt is a red-flag. It underscores structural vulnerability and the urgent need for disciplined policy and stronger growth.
