Pakistan’s Debt Rises by Rs. 8.974 Trillion in FY25 Amid Growing Fiscal Pressures

Pakistan’s central government debt surged by Rs. 8.974 trillion—a 13% increase—during the fiscal year ending June 30, 2025, highlighting the country’s growing dependence on both domestic and external borrowing to meet its fiscal requirements.

According to data released by the State Bank of Pakistan (SBP) on Tuesday:

• The total central government debt rose to Rs. 77.888 trillion by the end of FY25, up from Rs. 68.914 trillion a year earlier.
• On a month-on-month basis, the debt increased by 2.4% in June, pointing to ongoing fiscal challenges.

Domestic and External Debt Breakdown:

• Domestic debt climbed 15.5% year-on-year, reaching Rs. 54.471 trillion, with a 1.9% increase in June compared to May.
• External debt stood at Rs. 23.417 trillion, reflecting a 7.6% annual rise and a 3.7% month-on-month increase.

In dollar terms:

• Total external debt and liabilities increased to $134.97 billion by June 30, 2025, compared to $131.04 billion in FY24.
• Public external debt rose by 5.6% year-on-year to $103.75 billion.
• Multilateral debt grew 8.2% to $42.48 billion.
• Debt owed to the International Monetary Fund (IMF) increased to $9.268 billion, up from $8.378 billion in the previous fiscal year.

External Debt Servicing:

• Total external debt servicing reached $18.049 billion in FY25, up from $16.932 billion in FY24.
  • Of this amount, $12.711 billion went toward principal repayments.
  • $5.338 billion was paid as interest.
• The increase was largely due to the repayment of:
  • $2.7 billion in commercial loans
  • $1.47 billion in Naya Pakistan Certificates
  • $1.3 billion in scheduled bank loans

Debt Ratios and Fiscal Indicators:

• Debt-to-GDP ratio rose slightly to 73.2% in FY25, as debt outpaced the 8% nominal GDP growth.
• The external debt-to-GDP ratio remained at a seven-year low.
• External debt servicing as a percentage of total exports improved marginally, falling to 34% in FY25 from 35% in FY24.
• A report by Topline Securities indicated that external debt servicing was 115% of foreign exchange reserves in FY25, though this is projected to improve in FY26 as reserves are expected to strengthen by June 2026.

Repayments and SBP Profit:

• The government repaid over Rs. 2.6 trillion in debt to the SBP over the past year, including Rs. 1.6 trillion in early repayments.
• The SBP posted a net profit of Rs. 2.5 trillion for FY25, of which Rs. 2.428 trillion was transferred to the government.

Read More: Bitcoin Price Forecast: $200K Possible With Fed Rate Cuts