Moody’s, a global rating agency, is worried about how Pakistan handles its debt. They say the government spends more than half its money on paying interest.
This shows that the debt is hard to manage. Debt payments will go up by 18% in 2025. About 55% of the money the government expects to earn, Rs9.8 trillion, will be used to pay interest.
Moody’s pointed out that the increase in government spending reflects a lack of cost-cutting measures and high interest payments. It acknowledged the budget’s efforts to achieve faster fiscal consolidation but emphasized the need for sustained reforms to reduce liquidity risks.
The agency agreed with experts that the new finance plan is to help Pakistan get money from the IMF. They said it’s very important to keep making changes to meet the budget goals and get more money from outside.
Moody’s warned that people might get upset because of higher taxes and energy costs, which could make it harder to keep making changes.
World Bank Forecasts 2.3% Growth for Pakistan in 2025
In the budget for the year 2025, the government said it will spend more money than it makes, but not as much as last year. They expect the economy to grow a bit, by 3.6%, and prices to go up by 12%. They also plan to collect more money from people, about 46% more, by adding new taxes and making the economy stronger.
Moody’s says the budget wants to make more money instead of spending less. The World Bank thinks Pakistan will grow by 2.3% next year.
Factories will do better, and people will feel more confident because it will be easier to bring things into the country and prices won’t rise as much. Good money management and help from other countries could make people want to invest in Pakistan.
The report highlighted that while inflation has decreased due to stable exchange rates, it remains high. Foreign exchange reserves have increased in Pakistan, easing currency pressures and enhancing economic confidence.
Moody’s emphasized the need for fiscal discipline and sustained reforms to manage Pakistan’s debt effectively and attract international financing.
To read our blog on “Pakistan and Sri Lanka are at a risk to BoP, Moody’s report,” click here.
