The Pakistan total public debt has climbed to US$ 286.832 billion as of June 2025, marking nearly a 13% increase year-on-year. This sharp rise reflects growing fiscal pressures, major borrowing and stagnant nominal GDP growth.
Key Figures & Composition
- Public debt stock: PKR 80.6 trillion (≈ US$ 286.8 billion) as of June 2025.
- Domestic debt: PKR 54.5 trillion. External debt: around US$ 91.8 billion for the external component.
- Debt-to-GDP ratio: about 70% as of June 2025, up from around 68% in June 2024.
Drivers Behind the Debt Growth
- Fiscal deficits & borrowing needs: The federal deficit, net financing requirements and interest costs have placed upward pressure on debt stock.
- Weaker nominal GDP growth: With slower growth and lower inflation, the debt-to-GDP ratio rises even if borrowing growth moderates.
- Domestic debt expansion: Domestic debt rose about 15% YoY to PKR 54.5 trillion, the largest component of total debt.
- External debt component: Although external debt grew only ~6% YoY, its absolute size remains large, and currency/exchange rate risks persist.
Why This Matters — Risk-Implications
- With debt reaching near 70% of GDP, Pakistan’s fiscal space to invest in growth or respond to shocks shrinks.
- High debt servicing burdens: Much of revenue may be absorbed by interest payments and roll-overs, leaving less for productive spending.
- Vulnerability to external shocks: High external borrowing or large domestic short-term obligations magnify risks from currency depreciation, global rate changes, or demand slowdowns.
- Investment & confidence: A rising debt profile may hurt investor confidence, raise borrowing costs and constrain credit flows.
Context: Pakistan’s Economy & Policy Landscape
Pakistan’s economy has been navigating multiple headwinds — current account pressures, inflation, energy sector imbalances, and structural reforms. The debt review for FY25 shows the government is attempting debt-management reforms (such as lengthening maturities) but the overall stock remains large.
What to Watch Next
- How Pakistan manages debt servicing and rollover of large upcoming obligations.
- Whether GDP growth picks up, which would improve the debt-to-GDP ratio even without large borrowing reduction.
- Policy moves: Will the government pursue deeper fiscal reforms, broaden the tax base, cut subsidies and improve public-sector efficiency?
- External conditions: Global interest rates, exchange rates, and availability of multilateral financing will influence Pakistan’s debt sustainability.
- Structural reforms in sectors like energy, where “circular debt” and subsidies have been long-running drags. Dawn
In summary, the fact that Pakistan’s total public debt has crossed the US$ 286 billion mark in FY25 is a clear signal of urgency. While growth and reform efforts are underway, the large debt burden locks in constraints and raises serious questions about sustainable fiscal policy and resilience to shocks.
