The total debt of Pakistan’s central government surged to Rs76.61 trillion in September 2025, marking a 10.11% increase compared to Rs69.57 trillion recorded in the same month last year, according to data released by the State Bank of Pakistan (SBP). On a month-on-month basis, however, the government’s debt showed a marginal decline of 1.1% from Rs77.46 trillion in August 2025.
The year-on-year growth in debt is largely attributed to the government’s reliance on both domestic and external borrowing to finance the persistent fiscal deficit. Domestic debt remains the largest component, totaling Rs53.42 trillion, which includes Rs44.96 trillion in long-term obligations, Rs8.4 trillion in short-term borrowing, and Rs63 billion through Naya Pakistan Certificates.
Domestic debt rose by 12.39% year-on-year but fell slightly by 1.2% sequentially compared to August 2025. Within this category, long-term debt increased by 24.1% YoY to Rs44.96 trillion, up from Rs36.23 trillion a year ago, though it declined 0.86% compared to the previous month. Short-term domestic debt, in contrast, dropped sharply by 25.15% YoY to Rs8.4 trillion during September 2025.
Pakistan Investment Bonds (PIBs) account for the majority of long-term domestic debt, standing at Rs33.97 trillion. This reflects a 25.22% increase year-on-year but a slight 1.69% decrease compared to August. Market Treasury Bills (MTBs) continue to dominate short-term domestic borrowing, amounting to Rs8.29 trillion, down 25.61% YoY and 2.97% sequentially. Borrowing through Naya Pakistan Certificates also contracted by 25.88% year-on-year, totaling Rs63 billion in September 2025, while showing a 4.19% decrease compared to the previous month.
External debt contributed Rs22.91 trillion through long-term loans and Rs268 billion from short-term borrowing. The government’s external debt is increasingly critical to meet financing requirements, particularly as domestic revenue shortfalls persist and fiscal pressures remain high. Analysts note that the rising debt-to-GDP ratio may challenge future macroeconomic stability, placing additional emphasis on revenue mobilization and efficient expenditure management.
Overall, the data underscores a mixed trend for Pakistan’s debt profile. While the government has succeeded in slightly reducing debt on a monthly basis, the overall trajectory remains upward on an annual basis, highlighting the continued need for strategic fiscal planning. The composition of debt—heavily tilted toward long-term instruments—reflects efforts to secure stable financing while mitigating short-term liquidity risks.
As Pakistan navigates these fiscal challenges, the central government’s debt dynamics will remain a key area of focus for investors, policymakers, and financial institutions seeking to understand macroeconomic risks and investment opportunities in the country.
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