ISLAMABAD (PEN) : The International Monetary Fund (IMF) has forecast a significant rise in Pakistan’s government expenditure and public debt for the fiscal year 2025, according to its latest Fiscal Monitor report titled “Fiscal Policy under Uncertainty.”
Government Spending to Reach 21.6% of GDP
The IMF projects that Pakistan’s government expenditure will increase to 21.6% of Gross Domestic Product (GDP) in FY2025, up from 19.4% recorded in 2024. This rise reflects the country’s ongoing fiscal challenges amid efforts to boost economic recovery and development spending.
Debt Expected to Climb to 73.6% of GDP
The report also highlights a continued rise in public debt. Pakistan’s gross government debt is forecast to rise from 70.1% of GDP in 2024 to 73.6% in 2025. In parallel, net debt is expected to grow from 64.3% to 67.5% of GDP.
Revenue Collection Shows Improvement
On the revenue side, the IMF estimates that government revenue will increase to 15.9% of GDP in FY2025, up from 12.6% in 2024. This upward trend is projected to continue in 2026, with revenue expected to reach 15.2% of GDP.
Primary Balance Turns Positive, But Deficit Remains
The IMF expects Pakistan to achieve a primary surplus of 2.1% of GDP in 2025, a notable improvement from 1% in 2024. However, the overall fiscal balance will remain in deficit, with the IMF forecasting a -5.6% deficit for 2025, slightly better than the -6.8% recorded in 2024.
Debt Structure and Foreign Holdings
According to the report, the *debt-to-average maturity ratio* is projected at *15.9% of GDP* for 2025. Additionally, the *interest rate-growth differential* for the 2025-2030 period is estimated at *-1.4%*, indicating favorable debt dynamics over the medium term.
The IMF also noted that non-resident holdings of Pakistan’s general government debt are expected to account for 31.5% of total debt in 2024, highlighting the country’s reliance on external financing sources.
