Pakistan’s federal debt reaches Rs82 trillion by end-May

Pakistan’s federal government debt rose to Rs82 trillion by the end of May after increasing by Rs5.9 trillion during the first 11 months of 2025-26, according to the State Bank of Pakistan’s latest debt bulletin.

The increase translated into an average addition of around Rs16 billion per day between June and May. The debt stock, excluding liabilities and IMF debt, rose by 7.8%, higher than the average inflation rate of 7%.

Domestic debt remained the largest component, increasing by Rs4.7 trillion in one year to Rs58.1 trillion.

Long-term domestic debt rose from Rs45.2 trillion to Rs47.3 trillion, while short-term domestic debt increased from Rs8.1 trillion to Rs10.7 trillion. The Rs2.6 trillion rise in short-term domestic debt represented a 32% increase despite declining interest rates.

External federal government debt increased from Rs22.5 trillion to Rs23.8 trillion, a rise of Rs1.3 trillion. The increase remained lower than in previous periods due to rupee stability, with the currency appreciating to Rs278.4 against the US dollar during the fiscal year.

However, short-term external debt rose sharply from Rs201 billion a year earlier to Rs2.7 trillion by May. The SBP attributed the jump to the reclassification of long-term debt as short-term debt, without giving further details.

The growing debt burden has pushed interest payment costs to more than Rs8 trillion for the current fiscal year.

Separately, the Auditor General of Pakistan, in its 2024-25 audit report, raised concerns over debt repayment budgeting by the Ministry of Finance. The report said controls and checks needed to be strengthened to ensure accurate assessment of actual requirements for repayment of debt.

The audit noted that the federal government allocated Rs24 trillion for principal loan payments in 2024-25, approved a supplementary grant of Rs2.64 trillion and surrendered Rs2.8 trillion, but actual spending still reached Rs25.8 trillion.

The report also said the federal government was not preparing Debt and Losses reports required under the Financial Reporting Manual to provide monthly analysis of the national debt position.

The concerns come as the Debt Management Office remains without a permanent Director General for six months. The office has been operating on an ad hoc basis since January, with only one of three permanent director positions filled.