More debt, less development? Pakistan spends just 10% of annual budget

Pakistan’s fiscal performance has raised concerns among economists and policymakers as the country spent just 10.4% of its annual development budget in the first four months of the fiscal year. This low rate of expenditure is particularly notable because the government recorded a 0.8% budget surplus in the first quarter. Typically, a surplus might indicate fiscal discipline, but in this context, it suggests that funds are not being deployed for infrastructure and development projects. The discrepancy between available funds and actual spending points to potential administrative bottlenecks or political hesitance in approving large-scale investments.

The slow pace of spending comes at a time when public projects are facing widespread delays. These delays hinder economic growth and reduce the immediate benefits of government investment for the population. Meanwhile, the country’s external debt has nearly doubled, reaching $135.1 billion in 2025. This significant increase in debt places a heavy burden on the national economy, requiring a substantial portion of government revenue to service loans rather than fund domestic development. The combination of high debt and low spending creates a challenging environment for economic stability.

For readers in India, this situation offers a comparative perspective on regional economic challenges. India and Pakistan share borders and often face similar geopolitical and economic pressures, yet their fiscal strategies differ significantly. Understanding Pakistan’s struggle to balance debt repayment with development spending provides insight into the complexities of managing a large economy in a volatile region. It also highlights the importance of efficient fund utilization to ensure that fiscal surpluses translate into tangible improvements in infrastructure and public services for citizens.