The national debt has already risen to Rs78.9tr, including Rs43.4tr in domestic debt and Rs32.9tr in external loans. This is not surprising given that the government has been running an unsustainablely high budget deficit that averaged 7.3pc of the economic output over the previous five years. The study reveals that in the six months leading up to December, the country’s debt payments increased by over 64 percent to Rs 4.2 trillion. The study claims that over the course of the six-month period, debt servicing costs significantly exceeded increases in tax collections. According to the study, the ministry attributes our mounting problems with debt servicing to higher domestic interest rates.
