A consequence of the mounting debt pile is a huge increase in the cost of debt servicing. It has created default risk and is diverting half of the budget to debt servicing. But when he left office in April 2022, his government had added over Rs19 trillion to the total debt stock. Lower-than-targeted tax collection, steep currency devaluation, higher interest rates, high expenditures along with losses incurred by state-owned companies and debt mismanagement were the main reasons for the surge in public debt during the PTI’s tenure. A direct consequence of the mounting debt pile is a huge increase in the cost of debt servicing.

Source: The Express Tribune January 06, 2023 19:58 UTC