KARACHI: The federal government’s total debt stock accelerated by nearly Rs9 trillion in the last fiscal year (FY25), as government continued to rely on both domestic and external borrowing to finance the budget deficit.
According to the latest statistics issued by the State Bank of Pakistan (SBP) on Tuesday, the central government’s total debt (comprising both domestic and external debt) continued to increase and climbed by 13 percent during FY25.The overall debt stocks surged to Rs 77.888 trillion in June 2025, up from Rs 68.914 trillion in June 2024, showing an increase of Rs 8.974 trillion.
Analysts noted that the current debt growth rate of 13 percent is outpacing the nominal GDP growth rate of 8 percent. With current growth, Pakistan’s debt-to-GDP ratio in FY25 inched up to 73.2 percent, according to Topline Securities.
Pakistan ‘unprecedentedly’ retires Rs2,600bn domestic debt ahead of schedule
Despite the rising debt stock, analysts pointed out that the present government has managed the overall debt profile more effectively.
In a significant development, it retired Rs2.6 trillion worth of debt ahead of schedule, supported by the transfer of the SPB’s strong profits to the federal government.
Recently, Khurram Schehzad Advisor to Finance Minister, revealed that the Ministry of Finance earlier in the first half of FY25 retired domestic commercial market debt of Rs 1 trillion, the first such advanced debt retirement operation in Pakistan’s history.
In addition, the an early debt retirement of Rs 500 billion was made on June 30, 2025 and later the Debt Management Office executed another monumental repayment of Rs 1.133 trillion on August 29, 2025, which brings the total early retirement of SBP debt to Rs 1.633 trillion.
Including both the central bank and commercial portions, the total early debt retirement in less than one year now comes to over Rs 2.6 trillion.
Copyright Business Recorder, 2025
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