ISLAMABAD: Yet again failing in curtailing the total public debt at 60 per cent of GDP in a continued violation of the Fiscal Responsibility and Debt Limitation Act (FRDLA), approved by the Parliament, the total public debt of the country pushed up to Rs80.5 trillion in FY25 against Rs71.2 trillion in FY24, registering a surge of Rs9.3 trillion.
However, total public debt and liabilities stood at Rs92.7 trillion, but the Ministry of Finance reported only public debt standing at Rs80.5 trillion.
According to the debt policy statement, going to be submitted by the finance ministry before the Parliament in compliance with the FRDLA requirement, stated that total public debt increased by 13pc year on year (YoY) to stand at Rs80,518 billion, out of which domestic debt was Rs54,472 billion and external debt of Rs26,047 billion.
In terms of the debt-to-GDP ratio, total public debt increased to stand at 70.7pc as of June 2025. In terms of the FRDL Act definition (net of government deposits in the banking system), the debt-to-GDP ratio increased to 64.3pc.
The finance ministry informed the Parliament that during FY-25, total domestic debt increased by Rs7,312 billion to stand at Rs54,472 billion as of June 2025, showing an increase of 16pc YoY, which was still lower than the 22pc during same period of last FY-24.
Importantly, the domestic debt declined by 2pc during Q1-FY 26 to stand at Rs53,424 billion, due the government’s proactive decision to retire debt from SBP amounting to Rs1 trillion.
Domestic debt has three major components; permanent debt, floating rate debt, and unfunded debt.
Permanent debt is long-term debt having maturity of greater than one-year, fixed and floating, mostly in the form of Pakistan Investment Bonds (PIBs) and Government Ijarah Sukuks (GIS). As of June 25, permanent debt increased by 26pc (YoY) to stand at Rs41,777 billion. This was mostly driven by significant issuances in the medium- to long-term PIB and Sukuk issuances, which increased by 33pc. The number as on end September-25 declined by 2.4pc, mainly due to settlement of PIB amounting to Rs1 trillion from SBP.
Floating rate debt comprises of short-term debt having maturities of less than one year. They mainly include market treasury bills (MTBs) of three-month, six-month and 12-month tenors. During the FY-25, outstanding MTBs declined by 14.5pc to Rs8,756 billion. This is in line with the government’s strategy to reduce short-term debt to improve the refinancing risk profile. This trend has continued within Q1-FY 26, where MTBs declined by 3.4pc to stand at Rs8,400 billion as of end September-2025.
Unfunded debt is raised through non-banking sources primarily through various instruments available under the National Savings Schemes, administered by the Central Directorate of National Savings. The amount invested under various instruments of National Savings Schemes (NSS) increased 8.7pc YoY, to Rs3,021 billion as of end Jun-2025. Overall, unfunded debt contributed almost 6pc of total domestic debt.
The external debt increased by 6pc YoY to stand at $91.8 billion as on end June-25, reflecting an increase of 5 billion in USD terms. During Q1-FY- 26, it declined slightly by 0.4pc (USD 0.35 billion) to stand at USD 91.4 billion as on end September-2025. Major increase in the external debt came from multilateral development partners (including IMF) which increased by 8.7pc, almost USD 4 billion. Borrowing from commercial banks by USD 1.6 billon, largely due to a USD 1 billion loan secured against an ADB Policy Based guarantee.
In terms of external debt composition, following are the salient features:
More than half of Pakistan’s external debt (56pc as of September-25) is from multilateral development financial institutions, including the IMF.
Second major source of external debt is from bilateral partners including Paris club and bilateral countries deposits, which has approximately 26pc share of external debt.
The remaining external debt consists of 7pc from international bond issuances, 8pc from commercial banks, 2pc from other sources which also include Naya Pakistan Certificates.
Overall, the share of external debt in total public debt decreased from 34pc (June-24) to 32pc (June-25) which is within the maximum limit of 40pc as envisaged in medium term debt strategy (MTDS) but remains sensitive to exchange rate movement.
