State Bank Report: Pakistan’s Debt Reaches Highest Ever Level

Islamabad: The latest report by the State Bank of Pakistan has further increased concerns about the country’s economic situation. According to the released data, the total debt of the federal government reached Rs 76,045 billion as of May 2025, which is the highest level in the country’s history.

The State Bank documents has claimed that during the 11 months of the last fiscal year (July 2024 to May 2025), the federal government’s debt increased by Rs 7,131 billion, while in just one month, i.e., between April and May 2025, an increase of Rs 1,109 billion was recorded in debt.

Moreover, in just one year between June 2024 and May 2025, the debts owed to the federal government increased by Rs 8312 billion. Of this total debt, the largest share is from loans obtained from local sources, which has reached Rs 53,460 billion, while the volume of external debts has been recorded at Rs 22,585 billion.

According to economists, the major reasons for this extraordinary increase in debt include high fiscal deficit rates, weak exports, import dependence, subsidies, and poor performance of government institutions.

Experts are warning that if urgent reforms are not implemented, this debt burden could reach unsustainable levels in the coming years, which will not only affect development projects but also lead to a sharp increase in inflation, unemployment, and financial pressure.

It should be remembered that Pakistan is also facing pressure from other international financial institutions, including the IMF, to improve its fiscal discipline, expand the tax net, and reduce unnecessary spending to wean the economy from continued debt dependence.