Analysis of Public Debt of Pakistan in Different Regimes: From 1971 to 2021

Abstract

Pakistan struggles with debt issues and the difficulty of servicing this debt due to weak macroeconomic policies and political factors. This Study explore the role of public debt of Pakistan in political and military regimes from 1971 to 2021. It tests the hypothesis that there is a significant difference of debt to GDP ratio across regimes. The study uses Anova test for hypothesis testing and graphical analysis for debt components. The data is taken from Ministry of finance, State bank of Pakistan, World Bank and IMF (1971-2021). The results suggest that there is no significant difference of debt to gdp ratio. The graphical analysis of debt components show that Pakistan's public debt has been continuously increasing, with a greater increase in domestic debt as opposed to external debt, since 2008. The growing debt stock and the cost of debt servicing are becoming increasingly challenging. These findings can contribute to the broader understanding of public debt. This study offers useful policy implications.