Senate Committee Raises Concerns Over Pakistan’s Rising Debt

The Senate Standing Committee on Finance and Revenue expressed serious concern regarding Pakistan’s expanding public debt burden while reviewing proposed legislative amendments intended to strengthen the government’s Debt Management Office through enhanced institutional authority, operational capacity, and resource allocation.

During deliberations on amendments to the Fiscal Responsibility and Debt Limitation framework, committee members questioned the overall effectiveness and necessity of the Debt Management Office in light of the continued upward trajectory in national debt accumulation.

Members of the committee observed during the session that the sustained increase in the public debt graph warranted reconsideration of whether the Debt Office, in its current form, was effectively fulfilling its intended mandate.

Responding to the concerns, Bilal Azhar Kayani defended the proposed reforms and stated that strengthening the institutional capacity of the Debt Management Office was necessary to improve strategic planning, execution, and oversight of public debt management operations.

Kayani further informed the committee that the federal budget for fiscal year 2026-27 is expected to be presented during the first week of June.

The minister additionally stated that against an allocation of ₨9.7 trillion for debt servicing during the previous fiscal year, actual expenditure amounted to ₨8.9 trillion, resulting in savings of approximately ₨800 billion.

According to the minister, the government has earmarked ₨8.2 trillion for debt servicing in the outgoing fiscal year and anticipates a further reduction in servicing costs due to declining interest rates and partial retirement of public debt obligations.

Following deliberations, the committee unanimously recommended “The Fiscal Responsibility and Debt Limitation (Amendment) Bill, 2026” for approval by the Senate while also directing that the appointment process for the Director General (Debt) position be completed on a priority basis.

Despite endorsing the bill, committee members maintained reservations regarding the pace of debt accumulation and emphasised the importance of stronger fiscal discipline, enhanced oversight mechanisms, and prudent debt management policies.

The meeting, chaired by Saleem Mandviwalla, was attended by Muhammad Talha Mahmood and Muhammad Abdul Qadir.

Separately, the committee also examined “The Export-Import Bank of Pakistan (Amendment) Bill, 2026” and received a briefing regarding the governance structure and organisational framework of the state-owned export-import financial institution.

Officials informed the committee that the bank’s board composition would include two government-nominated directors, while the remaining board representation would be drawn from the private sector.

The proposed amendments additionally introduce formal definitions relating to ex officio and independent directors and incorporate governance provisions aligned with the State-Owned Enterprises Act.

Following discussion, the committee unanimously recommended the Export-Import Bank amendment bill for Senate approval.