Pakistan’s domestic debt has reached a historic Rs54,471 billion (Rs54.47 trillion) as of June 2025, representing a massive increase of over Rs28,000 billion in just five years. The official figures released by the Ministry of Finance reveal that the government’s reliance on internal borrowing continues to accelerate, deepening concerns over fiscal sustainability and long-term economic stability.
Continuous Growth in Debt Burden
According to the Finance Ministry’s data, Pakistan’s domestic debt stood at Rs26,265 billion in June 2021. By June 2025, the figure had more than doubled, underscoring the persistent dependence on local borrowing to bridge fiscal deficits and meet budgetary needs.
Despite periodic government assurances to curb borrowing, the data shows a consistent annual increase in domestic liabilities. Economists warn that this growing debt burden is limiting fiscal space for development spending, while much of the budget is being consumed by debt servicing.
Record Repayments and Rising Interest Costs
The report further highlights record levels of debt repayments and interest obligations. As of June 2025, principal repayments stood at Rs25,090 billion, while annual interest payments surged to Rs7,962 billion — an increase of over Rs800 billion in just one year.
For comparison, Pakistan’s annual interest payments were Rs7,164 billion in 2024, Rs4,936 billion in 2023, and Rs2,524 billion in 2021. This steep climb illustrates how debt servicing costs are rising much faster than government revenues, threatening to crowd out social and development expenditures.
Fiscal Pressure and Policy Concerns
Experts attribute the sharp rise in domestic borrowing to low tax revenues, high inflation, and limited access to external financing. With global lenders such as the IMF demanding fiscal discipline, Pakistan has increasingly turned inward — borrowing heavily through treasury bills, bonds, and bank financing.
This growing debt reliance also means that a significant portion of national income is being redirected toward repaying existing loans, leaving limited room for economic growth initiatives. Analysts caution that without comprehensive fiscal reforms and revenue enhancement measures, Pakistan may face even greater challenges in managing its debt profile.
In short, the latest figures paint a concerning picture of Pakistan’s economic trajectory. With domestic debt now exceeding Rs54 trillion and interest payments nearing Rs8 trillion annually, the government faces mounting pressure to implement structural reforms, broaden the tax base, and reduce its reliance on costly internal borrowing.
