Pakistan’s external debt servicing rose to $4.2 billion in the second quarter of FY25, marking a significant increase from $3.6 billion in the preceding quarter, according to data released by the State Bank of Pakistan (SBP). The bulk of these repayments stemmed from public debt, which surged to $3.29 billion in Q2-FY25, compared to $2.98 billion in Q1-FY25.
The country’s domestic debt and liabilities also climbed, reaching Rs50.19 trillion in December 2024, reflecting a 16.17% increase from Rs 43.21 trillion in December 2023. On a sequential basis, this figure rose 2.66% from Rs 48.89 trillion in November 2024.
According to the SBP, the largest portion of this debt was permanent debt, which grew 22.58% year-on-year to Rs 37.86 trillion. This included Rs 36.99 trillion in federal government bonds, Rs 474.94 billion in SBP’s on-lending against SDR allocations, Rs 394.32 billion in prize bonds, and Rs 2.84 billion in market loans. Floating debt also increased, rising 3.9% to Rs 8.7 trillion, with Market Treasury Bills making up Rs8.6 trillion of this total.
The government’s unfunded debt increased 1.06% year-on-year, reaching Rs2.87 trillion in December 2024, largely driven by a 1.34% rise in savings schemes, which stood at Rs2.79 trillion compared to Rs 2.75 trillion a year earlier. However, foreign currency loans declined, amounting to Rs 373.83 billion in December 2024, down from Rs 378.28 billion in December 2023. Borrowing through Naya Pakistan Certificates also saw a sharp contraction, falling 31.8% year-on-year to Rs 80.96 billion, though it increased 2.77% sequentially from Rs 78.78 billion in November.
Domestic government liabilities saw a 49.34% year-on-year decline, standing at Rs309.87 billion for the review month. This included $2.67 billion in government debt repayments, $563 million in IMF payments, and $55 million in foreign exchange liabilities.
Meanwhile, the private sector experienced a sharp rise in debt servicing, with payments soaring to $783 million in Q2-FY25, nearly doubling from $430 million in the previous quarter. Non-guaranteed private sector debt made up the entirety of this segment.
In contrast, public sector enterprises (PSEs) saw a decline in servicing costs, with repayments dropping to $77 million from $132 million in the previous quarter. The growing burden of public and private sector debt servicing continues to add pressure on Pakistan’s external account, highlighting the challenges the country faces in managing its debt obligations amid a fragile economic recovery.
