Pakistan faces Asia’s highest debt Interest burden at 6.82% of GDP, IMF warns
By Alpaslan Düven / Daily Mail Business Desk
Pakistan now shoulders the heaviest interest payments on public debt in all of Asia, consuming a staggering 6.82% of its Gross Domestic Product (GDP) — the highest among regional economies, according to new data released by the International Monetary Fund (IMF).
This alarming figure places Pakistan well ahead of regional peers such as India (5.41%), Bangladesh (2.05%), and Iran (1.07%) in terms of debt servicing costs. The rising payments are the result of decades of borrowing, persistently high interest rates, and a weakening currency that continues to pressure Islamabad’s fiscal outlook.
Economists warn that such a large portion of GDP spent on merely servicing existing debt leaves limited fiscal space for development, infrastructure, or social services. “Pakistan’s debt structure is unsustainable without substantial reform. This trajectory is squeezing out critical spending on education and health,” said a senior economist at a South Asia-focused think tank.
The IMF’s latest regional fiscal monitor has reignited concerns about Pakistan’s economic stability, particularly as the country negotiates a fresh loan package with the Fund following years of economic mismanagement and external shocks. Despite efforts to increase revenues and cut subsidies, Pakistan continues to run large budget deficits.
Meanwhile, India — though also facing significant interest payments — has managed its debt better, leveraging strong GDP growth and a broader tax base. Bangladesh and Iran, on the other hand, maintain far lower debt-servicing ratios, largely due to more cautious borrowing policies and limited exposure to global credit markets.
With elections looming and inflation biting into household budgets, Pakistan’s government is under pressure to balance austerity with growth. However, without a credible long-term debt management plan, analysts fear the country may be forced into deeper financial distress.
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