Ahsan Iqbal presses for overhaul of global debt system

Planning Minister Ahsan Iqbal called for a fundamental rewrite of the rules governing sovereign debt, telling the Sustainable Development Policy Institute's 29th Sustainable Development Conference that minor adjustments will not match the scale of the problem facing developing economies, according to Minute Mirror.

Minute Mirror linked the remarks to the Fourth Financing for Development Conference held in Seville in July 2025, which it said had already highlighted the risks posed by global debt distress.

Pakistan's own record gives it standing in the argument. In 2023 the country came close to default as State Bank of Pakistan reserves fell to about $3 billion, covering less than three weeks of imports. Pakistan is due to chair the IMF-World Bank Boards of Governors in 2027, a position the report said it could use to build support for a more transparent system.

The figures quoted in the report set out the size of the problem. The Institute of International Finance put total world debt at a record $348 trillion by the end of 2025. World Bank data shows average debt per person above $42,000, almost three times average annual income per head of about $14,400.

Poorer countries carry the heaviest load relative to their means. Low-income governments raise revenue equal to about 12 per cent of GDP, against 26 per cent in high-income economies, according to World Bank figures. Higher international interest rates and a strong US dollar push up both borrowing and repayment costs, and rising oil prices during Middle East tensions add pressure on low-income importers.

IMF debt sustainability assessments updated in September 2025 found nearly half of low-income countries in debt distress or at high risk of it. Zambia, Ghana, Sri Lanka and Ethiopia have defaulted since 2020. The World Bank estimates that more than 837 million people live in extreme poverty, many of them in countries under severe fiscal strain.

Efforts so far have produced limited results. The G20's Common Framework has been marked by long negotiations, slow implementation and modest progress. The mix of creditors has also changed: alongside Paris Club lenders, governments now owe private bondholders, newer bilateral creditors and lenders issuing loans against collateral, and coordinating these interests delays restructuring.

Most international sovereign bonds are written under New York or London law, and legislative changes in those two financial centres could give a restructuring framework firmer legal ground, the report said. Minute Mirror reported that the subject was also taken up at the IMF and World Bank annual meetings in Bangkok last month.