The research on household debts and indebtedness in Pakistan could play a critical role in envisaging evidence-based policies and decision-making. The experts from financial and economic sectors said this while sharing their views with the participants of the webinar and launch of study ‘Household debt and indebtedness in Pakistan: estimates and implications,’ organised by the Sustainable Development Policy Institute (SDPI) on Tuesday. Macroeconomist and former Economic Policy Advisor Federal SDGs Unit Planning Commission, Dr Ali Kemal while commenting on the study said that repaying debt in Pakistan has always been a pertinent issue. He highlighted that higher incidence of borrowing in Khyber Pakhtunkhwa that is indicated in the report may suggest a better social capital in the province. He added further that in view of the relation between poverty and indebtedness in the country, a detailed based study on the issue is the need of hour for evidence-based policies. Dr Sajid Amin, research fellow at SDPI, earlier, shared his research with the participants on household debt and indebtedness for Pakistan over the last two decades and discussed their implications for people and economy. He explained that in Pakistan a literature on household debt and indebtedness is non existing and thus, there is no data on the size of household debt and indebtedness. While presenting the findings of his study, he informed the audience that one fifth of households in Pakistan were in debt in 2018-19. He added further that in Khyber Pakhtunkhwa, more than half the population was under debt. The poorest 20% of society borrow 2.45 times more than the richest 20%. He suggested that BISP, particularly the Ehsaas programme, must design targeted interventions for poorest households who are trapped in debt. The annual size of household debt in Pakistan over the last 20 years has increased more than nine times, from Rs62 billion in 1988 to Rs601 billion in 2018, he added. “The total stock of household debt in 2018-19 was Rs1,162 billion,” Dr Amin while explaining that about 85% to 95% of it was borrowed from the informal sector. He suggested that SBP must integrate data on household indebtedness into its database and that the financial inclusion strategy of the bank must introduce debt literacy to promote responsible borrowing. Besides, he said, the impact of informal borrowing on the effectiveness of monetary policy, inequality and poverty needs to be explored in Pakistan. Fida Hussain, Additional Director, Monetary Policy Department SBP, termed the study as a first in-depth research on household debt and indebtedness in the country. He said that the study will help the policy makers to cater all these aspects of the household debt and particularly indebtedness. The digitization of the financial services, he said, will provide an opportunity to expand and enhance the financial inclusion of the people. Dr Vaqar Ahmed, Joint Executive Director, SDPI, while moderating the session, viewed that the main aim of discussion around the topic was to educate people about this emerging issue related to the household debt and indebtedness. Dr Fareeha Armughan, Associate Research Fellow SDPI, on the occasion emphasized that in rural segments the social, psychological, and religious factors are some of the impediments to the borrowing from formal channels and encourages the informal channels of borrowing.