KARACHI – Pakistan’s total public debt stock expanded sharply by nearly Rs9 trillion in Fiscal Year 2024–25 (FY25) as the federal government leaned heavily on both domestic and external borrowing to bridge its budget deficit.
According to data released by the State Bank of Pakistan (SBP) on Tuesday, the central government’s overall debt – which includes domestic and external obligations – grew by 13 percent during FY25. Total liabilities rose to Rs77.888 trillion by June 2025, up from Rs68.914 trillion a year earlier, reflecting an increase of Rs8.974 trillion.
Market observers noted that the 13 percent debt growth rate is running ahead of Pakistan’s nominal GDP growth of around 8 percent. As a result, the country’s debt-to-GDP ratio edged up to 73.2 percent in FY25, according to estimates by Topline Securities.
Despite the sharp rise in the overall debt stock, analysts said the government has demonstrated a more proactive debt management approach compared to previous years. In a landmark move, the federal government undertook early retirements worth over Rs2.6 trillion, aided by higher SBP profits transferred to the treasury.
According to Khurram Schehzad, Advisor to the Finance Minister, the Ministry of Finance in the first half of FY25 retired Rs1 trillion of domestic commercial debt ahead of schedule — the first such large-scale prepayment operation in Pakistan’s history.
Further, the government made an additional early retirement of Rs500 billion on June 30, 2025, followed by another repayment of Rs1.133 trillion on August 29, 2025 through the Debt Management Office. Combined, these operations brought total early retirement of SBP-related debt to Rs1.633 trillion.
Including both the central bank and commercial market components, Pakistan’s total early debt retirements within less than a year now exceed Rs2.6 trillion — an unprecedented milestone in the country’s fiscal management history.