Pakistan’s total federal debt climbed by nearly Rs9 trillion in fiscal year 2025 (FY25), driven by both domestic and external borrowing, according to data released by the State Bank of Pakistan (SBP).
The central government’s combined domestic and external debt rose by 13% during FY25, reaching Rs77.888 trillion in June 2025, up from Rs68.914 trillion in June 2024, an increase of Rs8.974 trillion.
Analysts noted that this debt growth is outpacing the nominal GDP growth of 8%, pushing the debt-to-GDP ratio to 73.2%.
Despite the rising debt, the government executed early retirements of domestic debt worth Rs2.6 trillion. In the first half of FY25, domestic commercial debt of Rs1 trillion was retired ahead of schedule, marking the first advanced debt retirement of its kind in Pakistan.
Further repayments included Rs500 billion on June 30, 2025, and Rs1.133 trillion on August 29, 2025, carried out by the Debt Management Office. Including these, total early retirements of central bank and commercial debt exceeded Rs2.6 trillion in less than one year.
Analysts said these repayments have improved Pakistan’s overall debt profile, even as total borrowing continues to grow to finance the budget deficit.
