Pakistan’s Public Debt Hits Rs74 Trillion – Economic Challenges Ahead

Pakistan’s Public Debt Reaches Rs74 Trillion as Government Meets IMF Condition

The Ministry of Finance has fulfilled another condition set by the International Monetary Fund (IMF) by releasing the semi-annual report on public debt for the fiscal year 2024-25. The report provides a detailed overview of Pakistan’s debt structure, interest payments, fiscal deficit, and economic performance during the July-December 2024 period.

Key Highlights from the Report:

1. Rising Public Debt:

Pakistan’s total public debt surged to Rs74 trillion by December 2024, reflecting an increase of Rs2,767 billion in just six months. This growth in debt continues to be a major concern for the country’s financial stability.

• Domestic Debt: Rs49,883 billion (67.4% of total debt)
• External Debt: Rs24,130 billion (32.6% of total debt)

Between July and December 2024, domestic debt rose by Rs2,723 billion, whereas external debt increased by Rs44 billion.

2. Interest Payments & Debt Maturity Period:

The government spent Rs5,142 billion on interest payments, with a significant 90% of the interest payments made on domestic debt.

• Domestic Loan Maturity: Improved from 2.9 years to 3.4 years
• External Loan Maturity: Remained unchanged at 6.2 years

3. Fiscal Deficit & Borrowing:

Pakistan recorded a fiscal deficit of Rs1,538 billion, which was primarily financed through domestic borrowing.

To secure medium- and long-term funding, the government issued Pakistan Investment Bonds and Ijarah Sukuk, offering financial instruments to investors.

4. Savings Through Buybacks:

The government launched the Government Securities Buyback & Exchange Program, which led to savings of Rs31 billion through the buyback of Rs1,000 billion in securities.

5. Economic Improvements:

The report highlights signs of economic stability and improvement, with a reduction in key financial pressures:

• Inflation Rate: Averaged 7.2% during the six-month period
• Primary Balance: Recorded a Rs3,604 billion surplus
• Exchange Rate Stability: No significant depreciation of the Pakistani Rupee
• Decline in Fiscal & Current Account Deficit

Conclusion:

Pakistan’s growing debt burden remains a major challenge despite improvements in key economic indicators. The government continues to rely on domestic borrowing and interest payments remain substantial. However, the IMF-mandated reforms and debt restructuring strategies aim to ensure greater financial discipline in the coming months.