Pakistan’s total central government debt surged to Rs77.46 trillion in August 2025, reflecting a 10.08 percent year-on-year increase from Rs70.36 trillion in the same month last year, according to the latest data released by the State Bank of Pakistan (SBP). The sharp rise underscores the government’s continued dependence on borrowing from both domestic and external sources to bridge its fiscal deficit and manage expenditures amid ongoing economic challenges.
On a month-on-month basis, however, the central government’s debt fell slightly by 1 percent, compared to Rs78.24 trillion recorded in July 2025. This minor decline was attributed to lower short-term borrowing and marginal repayments in domestic instruments during the review period.
A deeper look into the composition of the debt shows that domestic debt continues to dominate Pakistan’s total borrowings, accounting for Rs54.07 trillion, or nearly 70 percent of the total. The domestic debt comprises Rs45.35 trillion in long-term obligations and Rs8.65 trillion in short-term borrowing, with an additional Rs65.76 billion raised through Naya Pakistan Certificates.
The SBP data further reveals that the domestic debt saw a year-on-year increase of 11.86 percent, although it recorded a sequential decline of 1.66 percent. The growth was primarily driven by long-term instruments such as Pakistan Investment Bonds (PIBs), while short-term borrowing through Market Treasury Bills (MTBs) declined during the same period.
Long-term domestic debt surged by 21.6 percent year-on-year to Rs45.35 trillion from Rs37.3 trillion in August 2024, showing the government’s strategic shift toward longer-tenure borrowing to manage refinancing risks. However, it registered a slight monthly dip of 1.81 percent, reflecting restrained issuance activity. Within this category, PIBs remained the largest component, amounting to Rs34.55 trillion, up by 21.71 percent on a yearly basis but down 2.85 percent from July 2025.
Short-term domestic debt, on the other hand, contracted sharply by 21.05 percent year-on-year to Rs8.65 trillion. Borrowing through MTBs — a key short-term financing tool — stood at Rs8.54 trillion, representing a 21.5 percent annual decline and a 0.86 percent fall month-on-month.
Meanwhile, funds raised through Naya Pakistan Certificates fell by 17.8 percent year-on-year to Rs65.76 billion. On a monthly comparison, the government borrowed 7.96 percent less through these certificates than the Rs71.44 billion raised in July. The decline suggests reduced investor appetite amid changing interest rate dynamics and tighter liquidity conditions.
On the external front, Pakistan’s long-term foreign debt reached Rs23.09 trillion, while short-term external loans stood at Rs292.45 billion. The sustained buildup of external liabilities reflects continued reliance on international financial institutions, bilateral partners, and global bond markets to support foreign exchange reserves and stabilize the balance of payments.
Economists note that the overall rise in debt is a byproduct of the country’s structural fiscal imbalance, weak revenue generation, and persistent current account pressures. With growing debt servicing obligations, Pakistan faces the challenge of managing repayments while ensuring fiscal stability under the ongoing IMF-supported reform program.
The government’s strategy appears focused on lengthening the maturity profile of debt and diversifying financing sources. However, analysts warn that maintaining debt sustainability will require continued fiscal discipline, broadening the tax base, and achieving consistent economic growth to reduce reliance on borrowing.
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