n article by Dr Manzoor Ahmad, Rs100 trillion in debt: should Pakistan be worried?, offers a useful corrective to headline economics. An absolute number, however frightening, cannot by itself establish debt distress. Debt relative to GDP and revenue, interest costs, maturities, refinancing requirements and foreign exchange reserves all matter. On this framework, there should be little disagreement.

The disagreement begins with the inference that the direction may finally be changing. Some indicators have improved, but the evidence supports stabilisation under exceptional restraint, favourable interest-rate effects and discipline imposed by the International Monetary Fund — not a structural escape from Pakistan’s debt trap. A slower-moving debt machine remains a debt machine.

The first problem is definitional. The Rs 100 trillion headline refers broadly to Pakistan’s total debt and liabilities, reported by the State Bank of Pakistan at Rs 99.59 trillion (at end-June 2026). The 68 percent debt-to-GDP ratio refers to the narrower public-debt perimeter. These are not interchangeable.

Federal government debt alone stood at Rs 83.64 trillion. Total external debt and liabilities reached $138.85 billion. Moving from a broader stock to a narrower ratio without marking the change makes the picture appear safer than a like-for-like comparison might.

The slowdown in debt growth to about 7.7 percent is welcome. It is not small. When the base approaches Rs 100 trillion, 7.7 percent represents roughly Rs 7.7 trillion in a year. A constant annual addition will look slower in percentage terms simply because the denominator has become enormous. This is the arithmetic of the base, not necessarily fiscal transformation.

The debt-to-GDP ratio also requires care. Nominal GDP has expanded through inflation and changes in measured prices. Real growth has been modest. A falling ratio can coexist with rising debt, weak investment and declining public services. GDP measures output; it does not measure the government’s capacity to tax fairly, earn foreign exchange or refinance debt without squeezing citizens.

Debt-to-revenue, interest-to-tax-revenue, external servicing-to-exports and gross financing needs are at least as revealing. History of the Fiscal Responsibility and Debt Limitation Act, 2005, should cure policymakers of comfort derived from thresholds. When it was introduced, debt was below the 60 percent benchmark.

This distance sounds like the familiar persian line Hanooz Dilli door ast — (the destination is still far away) mentality. Successive governments borrowed, missed the reduction path, invoked exceptions and amended the framework. A ceiling became a signpost rather than a binding discipline. A ratio of about 68 percent remains above the statutory path intended to take public debt towards 50 percent.

The second source of comfort is the claim that interest payments have fallen from Rs 8.9 trillion to Rs 6.95 trillion and from 61 percent to 35 percent of total revenue. Both the fall and the relief are real. The chosen denominator conceals the continuing burden. Consolidated tax revenue in fiscal year 2025-26 was about Rs 14.2 trillion; markup payments therefore absorbed approximately 49 percent of it. Almost one rupee out of two collected in taxes went to the creditors.

The 35 percent ratio adds non-tax revenue of about Rs 5.6 trillion, including an extraordinary Rs 2.4 trillion State Bank surplus and about Rs 1.6 trillion petroleum levy. The former cannot be assumed at the same scale every year; the latter is extracted from energy consumers, kept outside the divisible tax pool and carries inflationary and distributional costs. This is not a robust revenue base.

Priorities provide the harsher test. Consolidated development spending remained around 2.6 percent of GDP in both FY2024-25 and FY2025-26, while markup payments declined from 7.7 percent to 5.5 percent. Interest still consumed more than twice the resources devoted to development.

Dr Hafiz A Pasha has calculated that development expenditure was cut by Rs 281 billion from the preceding year and nearly 20 percent against the intended level. A state that preserves solvency by postponing water, education, health and productive infrastructure is consuming its future to service its past.

The celebrated consolidated deficit of 2.6 percent also needs disaggregation. The provinces produced a cash surplus of roughly Rs 1.45 trillion, often by restraining development. The federal government — the principal borrower and payer of markup — still faced a financing gap of about Rs 4.76 trillion. A negative statistical discrepancy of Rs 853 billion helped the outcome. The consolidated number is valid, but disguises where the pressure resides.

Lengthening domestic maturity from about 2.8 to nearly four years intelligently reduces rollover risk. It does not eliminate interest-rate risk. The government’s Medium-Term Debt Management Strategy made almost 80 percent of domestic debt subject to refixing during FY2025-26 and placed average time to refixing at 1.2 years.

A long-dated floating-rate bond can reprice quickly. Converting short debt into long fixed-rate debt when discount rates are high may also lock taxpayers into an expensive position. Maturity must be evaluated with coupon, duration, refixing schedule and market conditions.

External vulnerability is less amenable to averages. In FY2025-26 external debt servicing reached $21.59 billion; $10.14 billion fell in the final quarter alone, 2.63 times the preceding quarter as principal repayments surged.

A six-year average maturity does not reveal such cliffs. Nor does a declining external share erase the absolute stock or repeated rollovers. Three months’ import cover is an improved buffer, but gross reserves must be assessed against short-term debt, friendly-country deposits, repayments and the imports required for growth.

The return to Eurobond and Panda Bond markets and S&P’s upgrade to B show restored access, not debt sustainability. The rating remains speculative grade. Market access can reduce stress; it can also tempt a government to treat the ability to borrow as evidence that it should borrow. Every foreign-currency bond must be judged by its cost, maturity, exchange-rate exposure and the foreign-exchange return of what it finances.

Institutional weakness completes the picture. Parliament legislated a strengthened Debt Management Office in 2022, including a professional director general. As of this writing, the office still awaits the incumbent taking charge. Detailed, accessible disclosure of the consolidated maturity ladder, refixing profile, creditor-wise rollovers, currency exposure and stress tests remains inadequate.

A capable director general can improve portfolio management. No debt office, however expert, can repair a fiscal order that produces debt through elite-protecting taxation, loss-making state enterprises, circular debt, untargeted privileges, centralised expenditure and borrowing unrelated to productive returns.

Pakistan should avoid both panic and complacency. Rs 100 trillion is not a disease; it is the accumulated record of a state that repeatedly borrowed instead of reforming. The recent reduction in interest costs, slower debt growth and longer maturities should be preserved.

Calling them turning points before the tax base becomes fair, development recovers, energy and SOE losses are confronted and external earnings finance imports and repayments; would repeat the optimism that weakened FRDLA from the beginning.

The right question is not whether Rs 100 trillion sounds frightening. It is whether Pakistan has stopped producing the deficits, inequities and external fragilities that created it. On that test, Delhi remains far away.

The writers are lawyers, adjunct faculty at Lahore University of Management Sciences and members of the Advisory Board of Pakistan Institute of Development Economics