ISLAMABAD – Pakistan’s debt-to-GDP ratio has started to decline gradually, according to the International Monetary Fund’s (IMF) Fiscal Monitor Report 2025, signaling cautious optimism for the country’s long-term fiscal stability despite persistent budget deficit concerns.
The IMF’s latest report, which provides detailed insights into fiscal deficits, revenues, expenditures, and public debt trends, projects that Pakistan’s debt-to-GDP ratio will ease slightly from 71.6% in FY24 to 71.3% in FY25.
Looking ahead, the Fund forecasts a significant reduction to 60.2% by 2030, contingent upon continued fiscal discipline and structural reforms. “There is a gradual decline projected in Pakistan’s debt burden relative to GDP, which reflects improved macroeconomic management and reforms under the IMF programme,” the report stated.
Read More: New IMF-Somalia Deal Aims to Sustain Reforms
While acknowledging progress on debt management, the IMF warned that Pakistan’s fiscal deficit is expected to exceed its initial target this year.
The deficit is projected at 4.1% of GDP, slightly higher than the government’s budgeted target of 3.9% for FY25.
Read More: IMF Chief Warns World Unprepared for AI Ethics and Regulation
However, the Fund remains optimistic that with sustained fiscal reforms, Pakistan can narrow the gap. Over the next five years, the fiscal shortfall is expected to fall to 2.8% of GDP, provided that reform measures and fiscal discipline remain consistent.
Economists say the IMF’s projections highlight a measured but positive outlook for Pakistan’s public finances, provided that the government continues to strengthen revenue mobilization, manage expenditures prudently, and adhere to the agreed fiscal reform path.