Pakistan’s government debt surged by Rs. 8.974 trillion, or 13%, during the fiscal year ending June 30, 2025, underscoring the country’s increasing reliance on domestic and external borrowing to meet its fiscal needs.
According to data released by the State Bank of Pakistan (SBP) on Tuesday, the central government’s debt climbed to Rs. 77.888 trillion by the end of FY25, up from Rs. 68.914 trillion a year earlier. The debt stock also saw a 2.4% increase in June compared to the previous month, reflecting the persistent fiscal pressures.
The SBP data revealed that domestic debt rose by 15.5% year-on-year to Rs. 54.471 trillion, with a 1.9% month-on-month increase in June. Meanwhile, external debt reached Rs. 23.417 trillion, marking a 7.6% annual rise and a 3.7% increase compared to May.
In dollar terms, Pakistan’s total external debt and liabilities rose to $134.97 billion by June 30, 2025, up from $131.04 billion a year earlier. Public external debt increased by 5.6% year-on-year to $103.75 billion, with multilateral debt rising by 8.2% to $42.48 billion. Debt owed to the International Monetary Fund (IMF) also grew to $9.268 billion, compared to $8.378 billion in FY24.
External debt servicing surged to $18.049 billion in FY25, up from $16.932 billion in FY24. Of this, $12.711 billion was allocated for principal repayments, while $5.338 billion was paid in interest. The increase was driven by the retirement of $2.7 billion in commercial loans, $1.47 billion in Naya Pakistan Certificates, and $1.3 billion in scheduled bank loans.
Pakistan’s debt-to-GDP ratio rose slightly to 73.2% in FY25, as debt grew faster than the nominal GDP growth rate of 8%. However, the external debt-to-GDP ratio remained at a seven-year low. The ratio of external debt servicing to total exports improved marginally, decreasing to 34% in FY25 from 35% in FY24.
A report by Topline Securities highlighted that external debt servicing as a percentage of foreign exchange reserves stood at 115% in FY25. This ratio is expected to improve in FY26 as reserves are projected to strengthen by June 2026.
The government has repaid over Rs. 2.6 trillion in debt to the SBP within the past year, including Rs. 1.6 trillion in early repayments. The SBP reported a net profit of Rs. 2.5 trillion for FY25, transferring Rs. 2.428 trillion to the government.
