By March 2025, Pakistan’s total public debt had reached Rs 76,007 billion — Rs 76 trillion — of which $87.4 billion was external government debt, according to the State Bank of Pakistan and the Economic Survey 2024-25. The country is on its latest IMF programme, in a succession that spans more than two dozen arrangements since the 1950s — a record that reflects not episodic fiscal difficulty but a structural condition of recurring insolvency from which Pakistan has not found a durable exit.
Against that backdrop, the Hangor submarine deal, contracted with Chinese state entities at terms that have never been made public, commits Pakistan to decades of debt service on a weapons platform — an arrangement that fiscal analysts describe as a contradiction too large to rationalise away.
The IMF’s successive programmes have kept Pakistan’s foreign reserves from depleting entirely. Each comes with conditionalities targeting subsidies, exchange rate management, revenue collection, and public expenditure. Pakistan has complied on the civilian side: social protection budgets have been cut, energy subsidies reduced, and exchange rates liberalised. What the IMF conditionalities have not reached is military procurement. The Hangor payments proceed on their own schedule, insulated from the austerity framework governing every other major expenditure line.
This creates a fiscal paradox unusual even by the standards of heavily indebted countries with large military establishments. Pakistan is borrowing from a multilateral lender whose conditions require it to reduce public expenditure, while simultaneously servicing obligations to a bilateral creditor whose financing funded a generational weapons acquisition.
The IMF’s reserve support maintains the buffer that would otherwise be eroded by the foreign exchange demands of Chinese loan servicing. Pakistan is, in practical terms, drawing on the same reserve pool — supported by IMF tranches — to service its Chinese defence financing. That is a fiscal absurdity that neither institution has addressed publicly.
The numbers in the Economic Survey are instructive. Interest payments on debt consumed Rs 6,439 billion in the first nine months of fiscal year 2024-25 alone. The federal primary deficit stood at Rs 2,415 billion over the same period. Total debt servicing obligations across the fiscal year approached Rs 9.7 trillion. In this environment, the Hangor programme’s acquisition cost is only the beginning. The submarines, once delivered, will require decades of dollar-denominated spare parts procurement, refits at schedules China will largely control, and software update cycles priced by Chinese state entities holding the relevant licences.
These are not speculative future costs. They are the documented maintenance structure of every Chinese export naval platform sold in the past two decades, and they will draw on the same constrained foreign exchange pool servicing every other external obligation Pakistan carries.
Pakistan’s revenue base remains structurally inadequate relative to its expenditure commitments. Its external debt interest outflows grew from $1.99 billion in fiscal year 2022 to $3.59 billion in fiscal year 2025 — an 80% increase in three years. The global interest rate environment has made dollar-denominated borrowing more expensive than it was when earlier tranches of CPEC financing were arranged.
The Hangor payments are being made into this deteriorating fiscal environment, competing for foreign exchange with IMF obligations, CPEC infrastructure loan servicing, and sovereign bond obligations to commercial creditors.
A country carrying Rs 76 trillion in public debt, operating under active IMF conditionality, and spending Rs 6,439 billion on debt interest in nine months has committed to a generational, multi-billion-dollar weapons platform whose full lifecycle costs have never been publicly presented to parliament. That is not an argument against military spending as a category.
It is an observation about fiscal capacity, institutional honesty, and the difference between defence investment made from a position of economic stability and defence spending made from a position of structural insolvency.
None of the money flowing into that programme reaches the Sindhi farmer whose irrigation canal was not rebuilt after the 2022 floods, or the Balochi child attending a school with no functioning infrastructure, or the Lahori patient queuing at a public hospital that ran out of essential medicines last winter. Pakistan’s fiscal choices have names, and they are not the names of submarines.