Pakistan’s financial burden continues to mount as interest payments on public debt have quadrupled over the past six years, climbing from Rs2,000 billion to a staggering Rs8,600 billion, according to a new report by Topline Research.

The report attributes the sharp rise in the debt servicing bill to an increase in both total borrowings and persistently high interest rates. As a result, the share of interest payments in the country’s Gross National Product (GNP) has doubled, now accounting for approximately 8% of the national output.

This alarming trend has significantly reduced the fiscal space available for essential sectors such as development, health, and education.

Muhammad Sohail, CEO of Topline Securities, noted that although the situation remains critical, there are emerging signs of relief. “The interest rate has dropped from its peak and now stands at 11%, which may provide some breathing room in the upcoming fiscal year,” he said.

Also Read: Increase in exports, decrease in imports and trade deficit recorded

Sohail added that with reduced interest rates, the government could find limited space to focus on reviving economic activity and making modest investments in public services.

The State Bank of Pakistan (SBP) had on Wednesday said that Pakistan's trade deficit fell by 23% to $2.6 billion in May.

According to details, the SBP had released monthly and annual trade data. The central bank said that exports rose by 17% in May 2025, reaching a value of $2.6billion.

Meanwhile, imports declined by 8% to $5.2 billion. As a result, the trade deficit in May decreased by 23% to $2.6 billion. However, during the first 11 months of the current financial year (July 2024 to May 2025), the cumulative trade deficit increased by 11%, reaching $24 billion.