Govt Begins Work on Reprofiling Domestic Debt

The Ministry of Finance has started work on a comprehensive reprofiling of the country’s domestic debt.

Sources privy to this development told ProPakistani the total volume of domestic loans has surged to Rs. 40 trillion, with interest payments alone reaching approximately Rs. 670 billion.

A significant portion of this debt burden is attributed to Pakistan Investment Bonds and Ijara Sukuks, amassing over Rs. 26 trillion. To tackle this financial predicament, short-term loans are set to undergo a transformation into long-term commitments through the reprofiling process.

The conversion of domestic debt into long-term commitments is anticipated to result in a reduction in the overall cost of borrowing. This strategic move is expected to not only alleviate the immediate financial strain but also contribute to the long-term financial sustainability of the country, sources said.

As part of the re-profiling initiative, authorities are aiming to raise the revenue collection to 15 percent of the Gross Domestic Product (GDP). Sources highlighted that currently, up to 70 percent of revenue collection is being channeled towards debt servicing.

By increasing the tax-to-GDP ratio, the government aims to strike a balance that allows for effective debt repayment while also fostering economic growth and development.

Get Alerts

Follow ProPakistani to get latest news and updates.

ProPakistani Community

Join the groups below to get latest news and updates.