Pakistan’s Debt Soars to Record Rs80.5 Trillion as Govt Adds Rs25 Billion Daily

 Pakistan’s Debt Soars to Record Rs80.5 Trillion as Govt Adds Rs25 Billion Daily

Pakistan’s public debt has climbed to an all-time high of Rs80.5 trillion by the close of June 2025, with the government piling up an average of Rs25.4 billion in loans every single day, according to the latest report issued by the State Bank of Pakistan (SBP).

The SBP debt bulletin for FY2024-25 revealed that public debt grew by Rs9.3 trillion (13%) in just one year. Alarmingly, the debt-to-GDP ratio also rose from 67.8% to 70.2%, breaching the Fiscal Responsibility and Debt Limitation (FRDL) Act which legally requires debt reduction each year until it reaches 50% of GDP by 2032-33.

Half the Budget Goes to Interest Payments

The sharp rise in borrowing has left Pakistan with shrinking fiscal space, as nearly half of the federal budget is consumed by debt servicing costs. Despite this, political pressure has pushed the government to continue launching mega projects, raising concerns about unsustainable fiscal management.

Total Liabilities at Rs94.2 Trillion

When combined with other liabilities, Pakistan’s overall debt burden has ballooned to Rs94.2 trillion, equal to 82.1% of GDP. Analysts warn that such a high debt-to-GDP ratio places Pakistan in the “unsustainable” zone, leaving little room for economic growth.

Domestic and External Debt Surge

• Domestic debt jumped from Rs47.2 trillion to Rs54.5 trillion, an increase of 15.5% in one year.

• External debt also edged up to Rs23.4 trillion despite a relatively stable rupee, raising concerns about repayment risks.

The report highlights that Pakistan’s external loans, though mostly concessional, carry rising short-term obligations that increase refinancing risks. About two-thirds of external debt is on fixed rates, offering some stability but still pressuring the balance sheet.

IMF Bailout and Rising Servicing Costs

Pakistan is currently under its 25th IMF bailout program worth $7 billion, but reliance on external financing continues to grow. Debt owed to the IMF rose by 13% to Rs2.63 trillion, with Islamabad paying Rs162 billion ($570 million) in interest to the Fund during FY25.

In total, the country spent Rs13.2 trillion on loan repayments and interest in the last fiscal year, including Rs9.5 trillion in interest payments alone, up by 10% from the previous year.

External Debt in Dollar Terms

Overall, Pakistan’s external debt and liabilities touched $135 billion by June 2025, rising by $4 billion compared to the previous year. The pace of increase was slower, partly due to the central bank purchasing over $8 billion from the local market.

Economic Outlook Remains Fragile

Experts caution that Pakistan’s fiscal health remains extremely vulnerable to shocks. The ongoing flood crisis has further strained resources, making it harder to stabilize debt levels. If fiscal discipline is not enforced, the debt-to-GDP ratio could rise well beyond the 70% danger threshold, putting Pakistan’s financial stability at even greater risk.