ACCORDING to some media reports, the national debt of the United States has crossed $40 trillion. One thing appears common between the US and Pakistan; the two countries are facing a crushing debt burden. The reason is simple: both the governments are living beyond their means as their expenditures outstrip the revenues, causing perpetual fiscal deficit in the budget.

As far as the US is concerned, its debt has doubled during the last 10 years, whereas in the case of Pakistan, its total debt and liabilities have more than doubled during the last five years. On the face of it, both nations appear broke on their respective balance sheets. However, there is a notable difference.

The US is the largest economy in the world and the dollar is still the global currency. The US has managed to insulate itself from a serious debt trap via inflow of petrodollars, foreign exchange reserves maintained in dollar terms by central banks in different countries across the globe and even printing dollars as the currency has ready acceptability globally.

Besides, the US population is rising by mere 0.5 per cent per annum, much lower than its GDP growth. Its national productivity has significantly improved through massive investment in research and innovation.

For Pakistan, the challenge is altogether different owing to a weak currency, low level of exports, technological backwardness, declining productivity and population explosion. The country is surviving on borrowing that is no longer sustainable.

Repeated approach to the International Monetary Fund (IMF) is meant to ward off the default scenario, but the situation is now at a tipping point, as the country is finding it difficult to service its debt obligations. It is facing a real debt trap. Pakistan direly needs highly educated, experienced and accomplished economists rather than bankers to chart a better course.

Arif Majeed
Karachi

Published in Dawn, October 6th, 2026