Think Tank urges government to channel national loans into investment, not wasteful spending

The Economic Policy and Business Development Think Tank (EPBDT) has strongly urged the government to stop using national loans for unproductive expenditures and instead invest them in profitable, growth-oriented ventures, reported 24NewsHD TV Tuesday.

According to the think tank, Pakistan’s ballooning debt, currently standing at Rs 7.2 trillion, should be used to enhance economic activities, not to subsidise inefficient government departments or guarantee profits to banks.

The EPBDT criticised the current practice of allocating loans toward expenses rather than investments, pointing out that only 2 percent of Pakistan’s annual borrowing—equivalent to 28 percent of GDP—is being utilised for development expenditure. The rest, the think tank noted, is being spent on maintaining government institutions and financing recurring costs, which adds little to the country’s long-term economic potential.

It warned that this debt mismanagement is also crowding out the private sector, making it difficult for businesses and entrepreneurs to access financing. As a result, the cost of doing business in Pakistan has surged to 11 percent, significantly higher than the regional average of 5.5 percent. The think tank observed that banks are receiving guaranteed returns while productive industries are starved of credit, stifling innovation, export growth, and job creation.

Citing the latest United Nations Development Programme (UNDP) report, the EPBDT said that Pakistan must urgently adopt basic economic reforms to make better use of loans. It also stated that its findings are being echoed by economists from the World Bank, reinforcing the need for fiscal responsibility and investment-led borrowing.

The think tank said that if immediate corrective measures are not taken, the nation risks deepening its debt trap. It called for a fundamental shift in the government’s economic strategy, stressing that loans must serve as tools for sustainable growth, not as financial lifelines to keep unproductive institutions afloat.