KARACHI: Pakistan’s government debt climbed to Rs76.05 trillion (~$270 billion) by May 2025, up 12.3 per cent year-on-year (YoY).
According to data released by the State Bank of Pakistan (SBP) on Friday, the debt rose by Rs8.31 trillion in the 12 months ending May 2025. Notably, Rs1.1 trillion was added in May alone.
Domestic debt surged 15.9 per cent YoY to Rs53.46 trillion, accounting for nearly 70 per cent of total liabilities. In contrast, external debt grew 4.5 per cent to Rs22.59 trillion, reflecting the government’s growing reliance on local financing amid tight global credit conditions and limited multilateral support.
The further analysis of the domestic debt profile reveals a pivot towards longer maturities. Long-term debt rose 23.9 per cent to Rs45.26 trillion, driven largely by a 27.3 per cent jump in federal government bonds, which reached Rs41.37 trillion. Meanwhile, short-term debt fell 14.6 per cent to Rs8.14 trillion — reducing rollover risk but locking the government into higher long-term servicing costs in a high-rate environment.
The sharp rise in borrowing has coincided with a challenging macroeconomic landscape, marked by persistent inflation, a narrow fiscal base, and the need to meet IMF-backed reform commitments.
In June, foreign exchange reserves held by the SBP decreased by record $2.66 billion on a weekly basis, clocking in at $9.06 billion as of June 20, the second biggest weekly drop on record. The SBP stated that its reserves decreased following the repayment of some of the country’s external debts, particularly related to commercial borrowing.
Total federal debt has ballooned from Rs68.91 trillion in June 2024 to Rs76.05 trillion in May 2025, reflecting a continued upward trajectory that began in mid-2022.
