Karachi: Pakistan's external public debt has surpassed $98 billion, with domestic debt climbing to Rs59 trillion, underscoring the urgent need for lowering production costs, boosting investment, and expanding exports to reduce the nation's dependency on borrowing. According to Pakistan Businessmen and Intellectuals Forum, Mian Zahid Hussain emphasized the necessity for a focus on productive sectors within economic policymaking to address these financial challenges.

Citing the Ministry of Economic Affairs' annual report for FY2025-26, Hussain noted a 6.84 percent increase in external public debt over the year, reaching $98.075 billion as of June 30, 2026. The country spent $14.436 billion on servicing this debt in the previous fiscal year, while receiving $16.16 billion in foreign economic assistance. Domestic public debt also surged by approximately 9 percent, amounting to Rs59.441 trillion by the end of June 2026, which constitutes 68.5 percent of total public debt. Hussain highlighted the importance of reducing unnecessary government expenditure and improving tax collection to manage domestic borrowing.

Hussain pointed out that a significant portion of foreign assistance supported the budget and balance of payments, with the remainder allocated to project and commodity financing. He stressed the importance of ensuring the completion and economic value of externally funded projects, particularly in sectors like energy, water, and transportation, to enhance productive capacity and reduce industrial production costs.

Pakistan's merchandise exports decreased by 5.93 percent to $30.139 billion during FY2025-26, while imports grew by 8.14 percent, widening the trade deficit by approximately 22 percent to $39.622 billion. Hussain urged for greater domestic value addition and export-oriented production to bridge this gap.

Remittances from overseas Pakistanis increased by 8.6 percent to $41.585 billion, providing crucial foreign exchange support. However, Hussain advised that these inflows should not be seen as a substitute for developing a sustainable capacity to repay public debt. He recommended enhancing the technical skills of Pakistani workers to improve their employment prospects abroad.

Hussain called on the government to ensure affordable energy, low-cost financing, and prompt tax refunds for export industries, while suggesting regular reviews of the costs and outcomes of externally financed projects. He advocated for reduced unnecessary expenditure, improved tax collection, and increased private investment to alleviate fiscal pressures and achieve lasting economic stability through growth in industrial production, exports, and employment.