ISLAMABAD [Pakistan], In recent years, Pakistan has seen a rapid increase in its debt stock, coupled with a worrying increase in debt payments, putting huge pressure on the national budget, a report published in Dow said. The government is grappling with an intractable problem. The high fiscal deficit averaged 7.3 percent of economic output over the past five years, leading to a national debt of a staggering PKR 78.9 trillion. This includes domestic debt of PKR 43.4 trillion and external debt of PKR 32.9 trillion. The country finds itself trapped in a debt trap, forced to borrow more to service both its existing domestic and external debt. As a result, annual debt payments have seen a significant increase, for example, initial estimates had projected debt payments to increase to PKR 7. trillion, which is about 58 percent of the budgetary expenditure for the current fiscal year.However, recent reports suggest the estimate has been revised to PKR 8.3 trillion, as reported by Dawn. The Finance Ministry's mid-year budget review report for the last financial year confirms these concerns. The report shows that the country's debt payments have increased by a staggering 64 percent, reaching PKR 4.2 trillion during the first six months to December. This surge has been attributed not only to the rising debt stock used to meet the fiscal deficit but also to the increase in the. Household borrowing costs pushed interest rates to a record-high 22 percent.As a result, expenditure on debt servicing has outpaced growth in tax revenues, resulting in stalled spending on development initiatives. The report underlines the detrimental impact of increased domestic interest rates on Pakistan's debt servicing challenges. The government is dependent on commercial bank loans to cover about 80 percent of its fiscal deficit due to declining foreign inflows, with rising interest rates posing a significant threat. Household loan payments previously accounted for about 90 percent of total debt service costs. According to Dawn, this cost of borrowing has spread across the entire economy, taking up half of the financial year, blocking private investment and stunting growth. However, the report failed to delve into the root causes of this debt trap. Is.While high interest rates add to the burden, the primary challenge is the government's inability to rein in its fiscal deficit, leading to continued debt accumulation. While a reduction in interest rates may provide some relief, it does not address the underlying issue of rising deficit and debt. The government's imperative is to raise the tax-to-GDP ratio to the world average by broadening the tax base, especially Only by targeting untaxed and low-tax sectors, as well as curbing wasteful spending to reduce fiscal deficit to sustainable levels, can borrowing requirements be met. Budget funding should be kept to a minimum. According to Dawn report, the effectiveness of such measures still remains to be seen as the country awaits the unveiling of the upcoming budget next month.