Lawmakers Urge Parliamentary Approval for All Foreign Debt Deals 2025
Pakistan’s debt crisis has once again become the center of national debate after senior lawmakers demanded that all foreign debt agreements be approved by Parliament before execution. The call, led by Syed Naveed Qamar, Chairman of the National Assembly Standing Committee on Finance, aims to enhance transparency, accountability, and public oversight of Pakistan’s growing external liabilities.
Background: Pakistan’s Rising Foreign Debt
Pakistan’s external debt has crossed $130 billion, with repayments consuming more than half of annual federal revenue. Over the past decade, successive governments have borrowed heavily from international lenders such as the IMF, World Bank, ADB, and Chinese financial institutions, often without formal parliamentary scrutiny.
Experts argue that this unchecked borrowing has weakened the economy and created long-term fiscal dependency. The Finance Ministry continues to contract foreign loans through executive decisions, a practice rooted in colonial-era financial laws that bypass elected institutions.
Naveed Qamar’s Proposal for Debt Oversight
Speaking at a policy forum in Islamabad organized by Friedrich-Ebert-Stiftung (FES) and the Sustainable Development Policy Institute (SDPI), Naveed Qamar emphasized that foreign debt agreements must be ratified by Parliament.
“The executive’s unrestricted authority to contract debt is a colonial-era legacy that should end. Parliament must have the right to review and approve every major debt deal,” Qamar said.
He urged that all multilateral loans, sovereign guarantees, and bilateral debt agreements be presented before the National Assembly’s finance committee before approval. According to him, this measure will ensure fiscal discipline and strengthen Pakistan’s credibility with global creditors.
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Why Lawmakers Want Transparency in Debt Deals
Currently, the Finance Ministry can sign international loan contracts without parliamentary ratification. This has led to limited public disclosure of critical agreements worth billions of dollars.
In FY 2024–25 alone, the government borrowed:
- $12.7 billion in foreign deposits, and
- Over $7 billion in commercial loans from foreign banks.
However, detailed information on interest rates, repayment schedules, and collateral has not been made public. Lawmakers argue that such opacity violates constitutional principles of financial accountability and undermines public trust.
Concerns Over Lack of Debt Transparency
Qamar highlighted that providing false or incomplete information to Parliament is a punishable offense under existing law. He warned that without legislative oversight, Pakistan risks entering unsustainable agreements that could endanger sovereign autonomy.
Independent economists support his stance, noting that many recent deals — particularly currency-swap arrangements and short-term commercial borrowings — have been finalized without clear disclosure.
Pakistan’s Public Debt Breakdown (2025)
| Category | Amount (Rs Trillion) | Share of Total Debt |
|---|---|---|
| Domestic Debt | 30.2 Trillion | 37.5 % |
| External Debt | 50.3 Trillion | 62.5 % |
| Total Public Debt | 80.5 Trillion | 100 % |
In addition, pension liabilities now exceed Rs 50 trillion, while circular debt in the energy sector remains above Rs 2.6 trillion — both of which are not fully reflected in official debt accounts.
Expert Opinions on Debt Accountability
Economist Zafar-ul-Hasan, former member of the Planning Commission, supported the idea of forming an independent debt reporting agency.
“Pakistan urgently needs an autonomous institution that reports all liabilities, including off-budget items such as pensions, guarantees, and state-owned enterprise loans.”
Meanwhile, Khyber Pakhtunkhwa’s economic adviser Muzammil Aslam called for a comprehensive definition of public debt that includes all contingent liabilities. He warned that ignoring hidden debt could distort fiscal planning and IMF negotiations.
Government’s Response: ‘We’re Improving Transparency’
Officials from the Finance Ministry defended the current framework, claiming significant progress in debt management strategy and auction transparency. They pointed to the introduction of a medium-term debt strategy (MTDS) and online publication of debt auction results as steps toward openness.
However, participants at the forum insisted that timely publication of all foreign loan contracts — including terms with China, Saudi Arabia, and commercial banks — is still missing.
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IMF Program and Fiscal Discipline
Naveed Qamar also endorsed continuing Pakistan’s IMF program, warning that abrupt withdrawal would jeopardize macroeconomic stability.
“All limits have been crossed; the situation is unsustainable. Parliamentarians must ensure accountability while maintaining fiscal responsibility,” he said.
He added that reforms should focus on cutting unnecessary spending, broadening the tax base, and improving debt-to-GDP ratio, which currently hovers near 75 percent.
Comparing Global Best Practices
Countries such as India, Malaysia, and the United Kingdom require parliamentary approval for key external borrowings. In India, for instance, debt ceiling limits are specified under the Fiscal Responsibility Act, ensuring that no government can borrow beyond its approved threshold without legislative consent.
Experts believe Pakistan must adopt a similar model to avoid unsanctioned borrowing and ensure debt sustainability.
Proposed Reforms for Debt Oversight
1️⃣ Parliamentary Ratification of All Foreign Debt – Every international borrowing agreement must be presented to Parliament for debate and approval.
2️⃣ Creation of a Debt Oversight Commission – A cross-party body to monitor disbursements, repayments, and debt restructuring.
3️⃣ Mandatory Public Disclosure – All sovereign guarantees and commercial loan details should be accessible on a government website.
4️⃣ Independent Annual Audit – An external auditor to verify loan utilization and project performance.
5️⃣ Stronger Fiscal Responsibility Law – Introduce legal limits on public debt as a share of GDP.
The Political Dimension
The demand for legislative control over foreign loans comes amid growing political tension between Parliament and the Finance Ministry. Critics accuse the executive branch of bypassing the legislature in IMF-related negotiations and China-Pakistan Economic Corridor (CPEC) financing.
Supporters of the proposal say public scrutiny will help prevent unnecessary or politically motivated loans, while ensuring future borrowing aligns with national development priorities.
Public Reaction and Civil-Society Advocacy
Civil-society organizations have welcomed Qamar’s call for parliamentary oversight. Advocacy groups such as Transparency International Pakistan (TIP) and the Pakistan Institute of Development Economics (PIDE) stress that open data on debt can help citizens track how funds are spent.
Social media discussions under hashtags #DebtTransparency and #PublicApprovalNeeded have gone viral, with many Pakistanis demanding a full public inquiry into foreign borrowing since 2018.
Challenges Ahead
Despite broad support, the proposal faces institutional resistance.
- Legal barriers: Existing laws grant wide discretion to the Finance Division under the 1951 Rules of Business.
- Political reluctance: Governments may avoid parliamentary scrutiny for fear of losing flexibility during IMF or bilateral negotiations.
- Capacity gaps: Parliament currently lacks a specialized debt analysis unit to review technical loan agreements.
Reform advocates suggest that Pakistan learn from the Philippines and Indonesia, where parliamentary finance committees receive regular briefings on external liabilities.
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The Broader Economic Context
Pakistan’s external financing gap for FY 2025–26 stands near $24 billion, including IMF repayments, Eurobond maturities, and Chinese deposits. Without reforms, future borrowing will only deepen the debt trap.
Transparency in debt management is also crucial for securing credit-rating upgrades from agencies like Moody’s and S&P, which currently classify Pakistan’s outlook as “negative.”
Conclusion About Lawmakers Urge Parliamentary Approval for All Foreign Debt Deals 2025
The call by lawmakers to ratify foreign debt deals through Parliament reflects Pakistan’s urgent need for fiscal transparency and democratic oversight. With external liabilities mounting and investor confidence dwindling, institutional accountability is no longer optional — it is essential for economic survival.
Implementing parliamentary scrutiny, independent audits, and public disclosure will restore trust in Pakistan’s economic management and ensure that every loan truly serves the national interest.
Trending Questions (FAQs)
1. Why are Pakistani lawmakers demanding parliamentary approval for foreign loans?
They want greater transparency and accountability in external borrowing after years of executive-level deals signed without public or parliamentary oversight.
2. How much foreign debt does Pakistan currently owe?
As of 2025, Pakistan’s total public debt exceeds Rs 80.5 trillion, including more than $130 billion in external liabilities.
3. What is Syed Naveed Qamar’s proposal on foreign debt?
He suggested that all foreign debt deals be ratified by Parliament, ending the Finance Ministry’s unrestricted authority to borrow internationally.
4. What are experts saying about debt transparency in Pakistan?
Economists and policy analysts agree that Pakistan needs an independent debt reporting agency and public disclosure of all foreign loans to regain investor confidence.
5. How will parliamentary approval affect Pakistan’s IMF program?
It won’t cancel the IMF program but will ensure better fiscal discipline, timely reporting, and political accountability in future negotiations.
