As Pakistan faces a severe economic crisis, the country’s public debt has surged to $286.832 billion by June 2025, marking an increase of roughly 13 per cent compared to the previous year. This debt now represents around 70 per cent of the nation’s gross domestic product (GDP), raising serious threat about the country’s economic future.
The sharp rise in public debt poses a significant challenge to Pakistan’s economic sustainability. The growing debt burden is likely to restrict the government’s ability to repay loans and limit its capacity to fund infrastructure development and social welfare projects. Consequently, Pakistan may be compelled to seek additional loans from international financial institutions and foreign governments, further exacerbating its debt situation. Economists warn that a debt level equivalent to 70 per cent of GDP is highly alarming. It can negatively impact the country’s credit rating and deter potential investors, creating further economic strain. These figures emerge amid rising inflation, a weakening Pakistani rupee, and shrinking foreign exchange reserves, all of which are intensifying the ongoing economic crisis.
The mounting debt is likely to pressure the Pakistani government into implementing drastic economic reforms. Such measures could include raising taxes, reducing subsidies, and cutting public expenditure, decisions that may prove unpopular but are necessary to stabilize the economy. The growing debt burden is expected to have long-term implications for economic growth and the living standards of ordinary citizens. It will remain a central challenge in Pakistan’s policymaking and budget planning for the foreseeable future.
Pakistan has long struggled with high debt levels, often relying on loans from countries such as China and Saudi Arabia to stay afloat. However, the country has been unable to repay much of this borrowing. The International Monetary Fund (IMF) recently downgraded Pakistan’s economic growth forecast to three per cent, down from an earlier estimate of 3.5 per cent, reflecting the severity of the situation.
In contrast, India is projected to maintain strong economic growth. The IMF estimates India’s GDP growth at 6.5 per cent in 2025 and 2026, while the World Bank projects it at 6.7 per cent. Analysts note that initiatives by the Modi government to strengthen the manufacturing and services sectors, including improvements in logistics infrastructure and tax reforms, are reinforcing India’s economic resilience.
International institutions such as the IMF and the Asian Development Bank (ADB) describe Pakistan’s economic outlook as concerning. Factors including political instability, weak industrial performance, and economic mismanagement are cited as the main drivers of the crisis. Observers also note that Pakistan’s continued support for terrorist activities, despite setbacks such as Operation Sindoor, adds further pressure to its already fragile economy and escalating debt burden.
Taliban plans to control water flow to Pakistan via Kunar River dams
Amid mounting economics crisis in Islamabad, Afghanistan under Taliban rule is preparing to control the water supply to Pakistan by constructing dams on the Kunar River. The Afghan Ministry of Information announced that Taliban supreme leader Maulvi Hibatullah Akhundzada has instructed that the dam construction begin as soon as possible. According to Minister Mullah Abdul Latif Mansoor Xil, Afghanistan has the right to manage its own waters, and the project will be executed by domestic personnel rather than foreign construction companies.
This development comes after India froze the Indus Water Treaty following the Pahalgam terror attack. Afghanistan is now following a similar path. The Taliban have prioritized establishing water sovereignty since assuming power in 2021, amid increasing tensions along the Afghan-Pakistan border. The Taliban claim that over 20 Pakistani soldiers have been killed in recent border clashes, underscoring rising hostilities.
The Kunar River, approximately 500 km long, originates in the Hindu Kush mountains in northeastern Afghanistan and flows through Kunar and Nangarhar provinces before entering Pakistan’s Khyber Pakhtunkhwa region. In Pakistan, it is known as the Chitral River and merges with the Kabul River near Jalalabad, which subsequently joins the Indus River. The river plays a vital role in irrigation, particularly in Khyber Pakhtunkhwa, and a reduction in its flow could impact water availability in the Indus River and Punjab. The announcement of the dam project follows a recent visit by Afghan Foreign Minister Maulvi Amir Khan Muttahiki to India, where he met External Affairs Minister S. Jaishankar. The timing of this decision highlights Afghanistan’s growing assertiveness in managing its water resources and signals potential strategic leverage over Pakistan. By focusing on domestic execution and asserting water sovereignty, the Taliban are signaling a decisive shift in regional water politics, with implications for both Pakistan’s irrigation systems and broader border relations.
Former CIA Officer claims Pakistan’s nuclear weapons were purchased by the US
Meanwhile, Former CIA officer John Kiriakou has revealed that Pakistan’s nuclear weapons were under US control during the tenure of former President General Pervez Musharraf. According to Kiriakou, Musharraf handed over control of the weapons to the United States after receiving substantial financial incentives. He also described Pakistan’s political leadership at the time as highly corrupt.
Kiriakou explained that the United States maintained strong ties with the Musharraf government. He noted that the US preferred dealing with authoritarian rulers, as this allowed them to bypass public opinion and media scrutiny. During Musharraf’s rule, the US provided millions of dollars in financial aid, covering both military assistance and development projects. US officials reportedly held meetings with Musharraf several times a week to maintain close coordination. The former CIA officer stated that in 2002 he became aware that Pakistan had handed over control of its nuclear arsenal to the US. This move, according to Kiriakou, was driven by concerns that the weapons could fall into the hands of terrorist groups. He emphasised that the transfer of control was a strategic decision to secure nuclear assets amid growing regional and global threats. These revelations shed light on the depth of US-Pakistan collaboration during Musharraf’s presidency and raise questions about nuclear governance and security in the region.
