Despite a nearly 10% increase in total public debt, reaching Rs74.103 trillion by December 2024, the government asserts that debt indicators are improving and associated risks are diminishing.
In its latest debt bulletin, released on Friday for the period ending December 31, the Ministry of Finance (MoF) reported total public debt at Rs74.013 trillion—an increase of over Rs6.683 trillion (10%) from Rs67.330 trillion in the comparable period.
According to the MoF, economic stabilisation and fiscal consolidation have contributed to improving public debt sustainability in the first half of FY2024-25. “The stock of total public debt has increased by 3.9pc in 1HFY25, as against an increase of 7pc during the same period last year,” the ministry stated, adding that key factors driving debt growth had been effectively managed. This included maintaining a significant federal primary surplus and a stable exchange rate.
Pakistan’s primary balance posted a surplus of 0.9% of GDP in FY24—the first such surplus in 20 years—and further improved to 2.9% in July-December FY25. International rating agencies responded by upgrading Pakistan’s credit rating by one notch and shifting the outlook from stable to positive.
The debt bulletin also highlighted improvements in key debt risk indicators. The Average Time to Maturity (ATM) for domestic debt increased to 3.4 years from 2.9 in June 2024, while external debt maintained a comfortable maturity period of 6.2 years. External debt accounted for 32.6% of total public debt, helping limit exposure to adverse exchange rate fluctuations.
The federal fiscal deficit was predominantly financed through domestic borrowing, particularly via the issuance of medium-to-long-term Pakistan Investment Bonds (PIBs) and Government Ijarah Sukuks (GIS).
A key highlight of this period was the introduction of the Government Securities Buyback and Exchange Programme, under which Rs1 trillion worth of buybacks were conducted, leading to Rs31 billion in debt servicing savings.
On the external front, most inflows continued to come from multilateral sources, while net retirements were made to bilateral creditors. The government defines total public debt as obligations owed by the centre—including federal and provincial governments—serviced through the consolidated fund, as well as debt owed to the International Monetary Fund.
Regarding the first half of FY2024-25, the bulletin noted that total public debt increased by 3.9% compared to the end of June 2024, a slower pace than the 7% rise recorded in the same period last year. This increase was primarily driven by domestic debt, which grew by 5% during 1HFY25—lower than the 9% growth observed in 1HFY24.
Overall, domestic debt comprises approximately 67% of total public debt, while external debt accounts for the remaining 33%.
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