Pakistan’s per capita debt rises 13% to Rs333,000 as fiscal deficit breaches legal cap

Pakistan’s total public debt increased from Rs71.2 trillion in June 2024 to Rs80.5 trillion by June 2025, while per capita public debt rose by 13% to Rs333,041 in fiscal year 2024–25, as the federal fiscal deficit exceeded the statutory limit by Rs3.1 trillion, according to the Ministry of Finance’s Fiscal Policy Statement presented to Parliament.

The statement showed that per capita debt increased from Rs294,098 in FY24 to Rs333,041 in FY25, reflecting a rise of about Rs39,000 within one year, calculated on the basis of a population of 241.5 million.

Public debt as a share of gross domestic product increased from 67.6% in June 2024 to 70.7% in June 2025. The report described public debt dynamics as a continuing challenge during the last fiscal year, attributing the increase mainly to higher interest payments and exchange rate movements. It said additional borrowing was undertaken to finance expenditures beyond legal limits.

For FY25, the federal fiscal deficit was recorded at 6.2% of GDP, significantly above the 3.5% ceiling prescribed under the law. In absolute terms, the federal government spent Rs3.1 trillion, or 2.7% of GDP, over and above the permitted deficit limit.

The ministry reported that total federal expenditure was budgeted at Rs18.9 trillion, including current expenditure of Rs17.2 trillion. Actual current expenditure stood at Rs15.8 trillion, while development spending, including net lending, reached Rs1.4 trillion against a budgeted Rs1.7 trillion.

Interest payments amounted to Rs8.8 trillion, compared with the budgeted Rs9.8 trillion, reflecting lower-than-expected costs following a reduction in the policy rate by the State Bank of Pakistan. Defence expenditure stood at about Rs2.2 trillion, exceeding the allocated Rs2.1 trillion, while subsidies reached Rs1.3 trillion against an allocation of Rs1.36 trillion. Pension payments totalled Rs911 billion, compared with a budgeted Rs1 trillion.

On the revenue side, tax collection reached Rs11.7 trillion, achieving 90.5% of the Rs13 trillion target. Non-tax revenues exceeded estimates, rising to Rs5.1 trillion, or 104% of the budgeted amount, mainly due to higher petroleum levy receipts and central bank profits.

The statement noted that the overall fiscal balance, including provincial accounts, improved compared with budget estimates. The total fiscal deficit was contained at 5.4% of GDP, lower than the budgeted 5.9%, supported by provincial cash surpluses, SBP profits and petroleum levy collections.

Under the law, the fiscal policy statement is required to provide Parliament with an assessment of expenditure, revenues, fiscal deficit and public debt. The ministry said its medium-term debt management strategy continues to focus on reducing financing needs, extending maturities and diversifying funding sources to support debt sustainability.