The debt burden of every Pakistani increased by 13% to Rs333,000 in the last fiscal year, according to the Finance Ministry’s Fiscal Policy Statement presented to Parliament. The report highlighted that public debt remains a key challenge as the federal fiscal deficit exceeded the statutory limit by Rs3 trillion.
Debt per capita rose from Rs294,098 in fiscal year 2023-24 to Rs333,041 in fiscal year 2024-25. Total public debt grew from Rs71.2 trillion in June 2024 to Rs80.5 trillion in June 2025, mainly due to higher interest payments and exchange rate movements. The report attributed these increases to additional borrowing to finance spending beyond legal limits.
Under the Fiscal Responsibility and Debt Limitation Act (FRDL), the Finance Ministry is required to submit the statement to Parliament by the end of January each year. Unlike some countries where exceeding debt ceilings can halt government operations, in Pakistan, such breaches are only reported to Parliament without immediate consequences for the federal government.
The fiscal year 2024-25 marked the first full financial year of the government led by Prime Minister Shehbaz Sharif, which assumed office in April 2024. During this period, the debt-to-GDP ratio rose from 67.6% to 70.7%, reflecting both absolute and relative increases that challenge claims of fiscal discipline. The report noted that government expenditures included expansion of federal departments, cabinet enlargement, and procurement of new assets despite austerity pledges.
The statement also detailed federal expenditure for the year. Total federal spending was budgeted at Rs18.9 trillion, with current expenditure planned at Rs17.2 trillion. Actual spending was slightly lower for current and development expenses but higher for defence and interest payments. The federal fiscal deficit stood at 6.2% of GDP, exceeding the 3.5% limit set by law, while the total fiscal deficit, including provincial accounts, was contained at 5.4% of GDP.
Revenue collection showed mixed results, with tax revenues reaching Rs11.7 trillion, or 90.5% of the budget target, while non-tax revenues exceeded projections at Rs5.1 trillion. Lower interest payments following a central bank policy rate cut helped partially offset the higher deficit.
The Finance Ministry emphasized that public debt dynamics remain a challenge and outlined a medium-term debt management strategy focused on reducing gross financing needs, extending maturity profiles, and diversifying financing instruments to maintain sustainability.
The report also noted sectoral spending, including defence expenditure at Rs2.2 trillion, interest payments of Rs8.8 trillion, subsidies of Rs1.3 trillion, and pension payments of Rs911 billion. These figures reflect both adherence and overshoot of budget allocations in key areas, highlighting the ongoing fiscal balancing act faced by the government.
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