Pakistan’s economy continues to feel the pinch of persistently high interest rates, as recent estimates reveal the government paid an additional Rs3 trillion in debt servicing costs during the last fiscal year alone.
According to financial analysts, the surge in payments stems from the State Bank of Pakistan’s tight monetary policy, maintained to curb inflation. However, the policy has also placed enormous pressure on the federal budget, with debt servicing now consuming more than half of total government revenues.
Economists warn that unless rates are gradually reduced and fiscal discipline is enforced, Pakistan’s debt sustainability will remain under severe strain. The situation highlights the growing challenge of balancing price stability and economic growth in an already fragile economy.
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