Senators raise alarm over rising debt amid lack of roadmap for economic stability

ISLAMABAD: Members of the Senate from both sides of the aisle on Monday raised alarm over the burgeoning debt of Pakistan, sans a roadmap for economic stability. On June 12, the government presented the budget for FY27, allocating Rs8,054bn for interest payments. Speaking on the floor, PPP vice president and parliamentary leader in the Senate, Senator Sherry Rehman, pointed out that approximately 42.8 per cent of the federal budget was being absorbed by debt servicing, including both interest and principal repayments. “When nearly half of the federal budget is consumed by debt obligations, the space available for development, social protection and public investment becomes severely constrained,” she noted during the budget discussion. She said that state-owned enterprises continue to place a heavy burden on public finances. “Losses of state-owned enterprises reached Rs832.848 billion in FY2025, with cumulative losses now standing at Rs6.563 trillion. Yet another Rs451 billion has been allocated to SOEs in this budget. This is a structural challenge that cannot be ignored indefinitely,” she added. Calling for reforms in governance and public expenditure, Senator Rehman urged the government to rationalise ministries, departments and institutions that continue to impose high operational costs on the national exchequer. She also called for a “fair taxation system” built on direct taxes and a broader base, warning that Pakistan’s growing reliance on indirect levies was undermining fiscal stability and burdening ordinary citizens. Senator Rehman said the country needed sustainable economic reforms, not stopgap measures. “Direct taxes should be increased while dependence on indirect taxes should be reduced to lessen the burden on ordinary citizens,” she said. “Pakistan cannot become economically self-reliant without widening the scope of taxation.” She flagged the ballooning Petroleum Development Levy as a key concern. “Excessive reliance on levies and indirect taxation ra