Pakistan’s central government debt continues its upward trajectory, crossing the staggering mark of Rs. 76 trillion in May 2025. Fresh figures released by the State Bank of Pakistan reveal that the total debt stock of the federal government rose by 12.3 percent year-on-year, climbing from Rs. 67.733 trillion recorded in May 2024 to Rs. 76.045 trillion by May this year. This substantial jump underscores the persistent fiscal pressures confronting the country, largely driven by increased reliance on domestic borrowing to bridge widening budget gaps.
On a month-to-month basis, the federal government’s debt stock also edged higher, showing a 1.5 percent uptick from Rs. 74.936 trillion registered in April 2025. This sequential rise highlights the continued strain on public finances as the government grapples with hefty debt servicing obligations and ongoing expenditure requirements.
Breaking down the figures, the domestic component of the central government’s debt surged significantly. It expanded by 15.9 percent over the past year, reaching Rs. 53.46 trillion in May 2025 compared to Rs. 46.125 trillion in the same month of the previous year. When measured against the previous month, domestic debt showed an increase of 1.8 percent, reflecting the government’s sustained preference for local borrowing avenues amid challenging external financing conditions.
Within the domestic debt profile, long-term borrowings have notably driven this growth. The stock of long-term public debt escalated by a considerable 23.9 percent, leaping from Rs. 36.516 trillion in May 2024 to Rs. 45.26 trillion in May 2025. This sharp increase indicates a strategic shift toward locking in debt over extended tenors, likely aimed at managing rollover risks and ensuring predictability in future repayments.
Conversely, short-term borrowing by the government saw a decline over the year. The data shows that short-term debt shrank by 14.6 percent, falling from Rs. 9.522 trillion to Rs. 8.136 trillion. This reduction could be attributed to debt restructuring strategies or a cautious approach to avoid frequent refinancing challenges in an environment of evolving interest rates.
The consistent build-up in public debt highlights underlying structural concerns in Pakistan’s fiscal framework. Rising domestic debt not only amplifies debt servicing costs but also crowds out private sector credit, potentially dampening investment-led growth. With the State Bank keeping a close watch on monetary dynamics and inflationary trends, managing the debt burden remains critical to maintaining overall financial stability.
Looking ahead, economic analysts stress the urgency for comprehensive fiscal reforms that can broaden the revenue base and curtail excessive expenditures. Without meaningful adjustments, the mounting debt could pose heightened risks to Pakistan’s macroeconomic resilience, making it imperative for policymakers to adopt a balanced approach toward growth and debt sustainability.