Pakistan govt’s debt stock soars to Rs73.6trn by March-end

KARACHI: Pakistan’s federal government debt stock surged to Rs 73.6 trillion by the end of March 2025, as rising domestic borrowings fueled by fiscal deficit financing pushed the debt burden up.

According to statistics released on Monday by the State Bank of Pakistan (SBP), some 7 percent increase was recorded in total debt during the first nine months (July-March) of the ongoing fiscal year 2025 (FY25), rising from Rs 68.914 trillion in June 2024 to Rs 73.688 trillion in March 2025.

The Rs 4.774 trillion addition to the debt stock reflects the government’s growing reliance on loans to bridge the widening fiscal shortfall.

Public debt till Feb 25th totals Rs75.3trn

The bulk of the increase stemmed from domestic debt, which jumped by Rs 4.358 trillion or 9.2 percent, reaching Rs 51.518 trillion by the end of March 2025 as against Rs 47.160 trillion in June 2024. This domestic portion included Rs 43.595 trillion in long-term loans and Rs 7.86 trillion in short-term borrowings.

Meanwhile, external debt showed only a modest increase, rising 2 percent or Rs 416 billion over the nine-month period to stand at Rs 22.17 trillion. This limited growth was partially attributed to exchange rate stability, with the Weighted Average Customer Exchange Rate of the US dollar recorded at Rs 278.3668 in June 2024 and Rs 280.1721 in March 2025.

The rising debt raises concerns about Pakistan’s fiscal sustainability and the government’s ability to manage its financing needs without deepening economic vulnerabilities.

Economists warn that without meaningful reforms to enhance revenue collection and curtailing expenditure, the country may borrow more from the domestic and external resources to meet its financial needs.

Federal Board of Revenue (FBR) tax revenue recorded a sizable 26.3 percent y/y growth during July-April FY25, though it remained below the target. In order to increase the revenue collection, the government has raised PDL rates, which is expected to further propel non-tax revenues in the remaining months of FY25.

Moreover, According to SBP, estimates from the financing side suggest that overall expenditures remained relatively contained during July-March FY25. Therefore, the SBP is expecting that the overall fiscal deficit may remain close to the FY25 target, achieving the targeted primary surplus appears to be challenging.

SBP in its recent policy has also highlighted the need for reforms to put the fiscal sector on a more sustainable footing, especially by expanding the tax net and reforming SOEs.

Copyright Business Recorder, 2025