By Staff Reporter
KARACHI: Pakistan’s total public debt swelled by a staggering Rs9.3 trillion in fiscal 2024-25, pushing the stock to Rs80.5 trillion by the end of June 2025 and adding Rs25.4 billion to the burden every single day of the year, according to official figures tabled in the National Assembly on Friday.
Finance Minister Muhammad Aurangzeb, in a written reply to lawmakers’ questions, confirmed the headline increase but noted that under the narrower definition used in the Fiscal Responsibility and Debt Limitation Act of 2005, the rise was Rs8.2 trillion, or Rs22.3 billion a day. On that basis, the public debt-to-GDP ratio stood at 64.4% at the end of June 2025, against the broader 70.8% ratio that includes other liabilities.
The disclosures come as the government defends its fiscal record amid persistent concerns over debt sustainability and the heavy interest burden that has crowded out development spending. Aurangzeb highlighted several steps taken to rein in risks. The government has posted primary surpluses for two straight years, shifted new borrowing toward longer-maturity instruments, and carried out Pakistan’s first sovereign domestic debt buybacks.
In FY25, it repurchased Rs1.5 trillion of securities maturing in the near term, with another Rs1.1 trillion of buybacks planned for the current fiscal year. The average time to maturity of domestic debt has been extended from 2.8 years to 3.8 years, delivering interest-cost savings of more than Rs880 billion in FY25 alone.
More recent data, however, shows a sharp reversal. Central government debt fell Rs1.283 trillion in the July–September quarter of FY26, the first quarter of the current fiscal year, taking the total stock to Rs76.605 trillion by the end of September, the State Bank of Pakistan reported separately.
Almost all of the decline came from domestic debt, which contracted Rs1.048 trillion to Rs53.424 trillion. Long-term domestic debt dropped Rs692 billion to Rs44.961 trillion, and short-term paper fell Rs356 billion to Rs8.4 trillion. External debt in rupee terms declined Rs236 billion to Rs23.181 trillion.
Analysts attributed the quarterly reduction largely to an extraordinary Rs2.4 trillion profit transfer from the central bank to the federal government, out of the State Bank’s Rs2.5 trillion profit for FY25, along with disciplined net budgetary borrowing as fiscal consolidation measures begin to bite. The early drop is seen as a welcome relief that should lighten interest payments and create room for private-sector credit growth.
Copyright © 2021 Independent Pakistan | All rights reserved
