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KARACHI: The government said on Saturday it expected slower growth in public debt in the current fiscal year amid a stabilizing economy, as it rejected claims that Pakistan’s overall debt had doubled in the past three years.

Officials have repeatedly said the country’s macroeconomic indicators have improved markedly since mid-2023, when Pakistan narrowly avoided a sovereign default and secured a short-term International Monetary Fund (IMF) loan with tough reform conditions.

The economy’s recovery has since been recognized by multilateral lenders and credit rating agencies. Yet, some social media posts were creating a misleading impression that Pakistan’s debt burden had doubled since 2022, according to Khurram Schehzad, an advisor to the finance minister.

“The central government’s debt stood at PKR 80 trillion [$280 billion] as of June 2025,” Schehzad said in a statement, adding that contrary to claims that it had doubled, the debt stock had only increased "by PKR 31 trillion [$108.5 billion] between FY22-25, from PKR 49 trillion [$171.5 billion] to current PKR 80 trillion [$280 billion].”

He pointed out annual debt growth that once ran as high as 23 percent in FY22 and 28 percent in FY23 had eased to about 13 percent in FY24 and FY25, crediting a record primary budget surplus and the country’s early repayments of more than Rs2.6 trillion ($9.1 billion) within the last 11 months.

Schehzad also pointed to other signs of stabilization, saying the share of external debt had fallen to 32 percent of the total, reducing vulnerability to swings in the rupee, while in dollar terms external debt has inched up by only $2.9 billion over three and a half years.

Strong remittances of $38 billion and current account surpluses further underpinned the currency, he added.

He said Pakistan’s debt-to-GDP ratio has declined to around 70 percent from 77 percent in FY20, while interest costs dropped by Rs850 billion ($3 billion) in FY25 alone, helping shrink the federal fiscal deficit to Rs7.1 trillion ($24.9 billion), below the budgeted Rs8.5 trillion ($29.8 billion).

"With the economy stabilizing — as evidenced by rating upgrades from international agencies and a stable currency, FY26 is expected to see a further limitation in debt growth and continued fiscal improvement," he added.

ISLAMABAD: President Asif Ali Zardari on Saturday visited the Kashgar Free Trade Zone, a major trade and logistics hub in China’s Xinjiang region, and urged a private Chinese airline to expand its operations in Pakistan as part of efforts to deepen economic and cultural ties with China.

Zardari, on a ten-day state visit to China since Sept. 12, has met with Chinese political, business and industry leaders to strengthen cooperation across diverse sectors.

On Friday, he attended a dinner hosted by the vice governor of Xinjiang and the Communist Party secretary of Kashgar, where he engaged with regional Chinese leaders.

“President Asif Ali Zardari visited the Kashgar Free Trade Zone, the only facility of its kind in southern Xinjiang and an important hub for trade and logistics in the region,” his office said in a statement.

The zone, established in 2015 over 3.56 square kilometres, consolidates bonded warehousing, logistics, processing, customs clearance and air freight services, and maintains trade links with 118 countries exporting goods ranging from electric vehicles and batteries to solar cells, high-tech goods and auto parts.

It is connected by road, rail and air to both Asia and Europe and has its own international airport.

The zone is also linked with Sost port in Pakistan's northern Gilgit-Baltistan region, just 400 kilometers away.

Beijing and Islamabad launched the multibillion-dollar China-Pakistan Economic Corridor (CPEC) to enhance regional connectivity and build large-scale energy and infrastructure projects.

The corridor links China’s Xinjiang region with Pakistan’s southern Arabian Sea ports, shortening trade and oil supply routes to southwestern China.

The two countries now aim to upgrade CPEC to include industrial and agricultural development in Pakistan.

Zardari's office said the president was briefed on the Digital Trade Center, which was opened last year and now houses to more than 5,400 companies, along with the cross-border e-commerce exhibition center, with duty-free products from across Central Asia, Europe and beyond.

AIR CONNECTIVITY

Earlier in the day, the president met with Serene Air CEO Yunchun Yang, who briefed him on the airline’s plans for future operations in Pakistan.

Zardari requested that Serene Air increase its fleet to strengthen the airline network and connectivity.

Yang assured the president of further investment in the Pakistani aviation sector.

Serene Air is the first Chinese private investment in Pakistan’s aviation sector, and the first Pakistani airline to operate flights to Beijing.

A day earlier, Vice Governor of Xinjiang Nie Zhuang highlighted the centuries-old relations between the people of Kashgar and Pakistan while hosting the president.

“Kashgar greatly valued its friendship with Pakistan and looked forward to enhancing cooperation in trade, culture and people-to-people exchanges,” he said.

Zardari expressed gratitude for the hospitality and said he was deeply impressed by the “remarkable progress” he had witnessed across various Chinese cities.