Pakistan stresses early action to tackle sovereign debt vulnerabilities

February 09, 2026 (MLN): Pakistan has emphasized the importance of strong institutions, credible policies, and proactive reforms to address sovereign debt vulnerabilities while sustaining growth and social spending.

Finance Minister Senator Muhammad Aurangzeb, highlighted that managing debt is not just about controlling its size, but preventing liquidity pressures from escalating into solvency crises, and ensuring that development and climate objectives remain on track during the AlUla Conference for Emerging Market Economies 2026, jointly organized by the Government of Saudi Arabia and the International Monetary Fund, according to a press release issued.

He referenced Mohammed AlJadaan, Saudi Arabia’s Finance Minister, while noting that macroeconomic stability is a prerequisite for durable growth, a lesson Pakistan’s recent experience has reinforced.

The finance minister detailed Pakistan’s progress in restoring fiscal stability, citing disciplined macroeconomic policies, institutional reforms, and proactive debt management.

Over the past three years, Pakistan has reduced its debt-to-GDP ratio to around 70% from 74%, stabilized external debt levels, and achieved tangible interest cost savings.

Efforts include extending debt maturities, early repayments, and reforms that have raised the tax-to-GDP ratio to around 12% through digitization and base-broadening measures.

He also highlighted Pakistan’s commitment to transparency and sustainable financing, including the institutionalization of Debt Sustainability Analysis aligned with IMF-World Bank standards, and initiatives such as the Green Sukuk and the Sovereign Sustainable Financing Framework.

These measures, he noted, strengthen risk management, improve creditor engagement, and enhance market confidence in line with the G20 Common Framework.

Concluding his remarks, Senator Aurangzeb stressed that enhanced global coordination, strong creditor cooperation, and climate-integrated debt frameworks are critical to help emerging economies manage debt sustainably without compromising growth and development priorities.

Copyright Mettis Link News