Pakistan’s Central Govt Debt crossed the Rs 76 trillion mark in May 2025, recording a 12.3% jump from Rs 67.73 trillion a year earlier, according to the State Bank of Pakistan. The figure also shows a 1.5% increase from April’s Rs 74.94 trillion, highlighting continued fiscal pressures.
What’s Fueling the Increase?
Domestic debt climbed to Rs 53.46 trillion, showing a 16% annual rise and 1.8% increase from the previous month. Most of this growth came from long-term instruments, which rose significantly to Rs 45.26 trillion.
Out of the total domestic debt, the long-term public debt increased by 23.9%, rising from Rs. 36.516 trillion in May 2024 to Rs. 45.26 trillion in May 2025.
Meanwhile, the stock of short-term debt decreased by 14.6%, falling from Rs. 9.522 trillion to Rs. 8.136 trillion over the last year.
- Pakistan Investment Bonds (PIBs) surged to Rs 35.24 trillion, marking a strong 27% increase year-on-year.
- Market Treasury Bills (MTBs) dropped about 15% YoY to Rs 8.14 trillion, reflecting a shift towards longer-term borrowing.
- Naya Pakistan Certificates fell 26.1% to Rs 64 billion on an annual basis but rose 3.4% compared to April.
Total external debt reached Rs 22.58 trillion, including Rs 22.38 trillion in long-term loans and Rs 0.2 trillion in short-term borrowing.
Why It Matters
The steady climb in Pakistan Central Govt Debt shows heavy reliance on debt to bridge budget deficits. While long-term instruments like PIBs help reduce rollover risks, they raise debt servicing costs, which now take up a major share of government spending.
The Risks Ahead
Pakistan’s new budget projects an additional Rs 11 trillion in fresh borrowing for the upcoming fiscal year, pushing the total debt stock close to Rs 87 trillion by mid-2026.
This would push the debt-to-GDP ratio to nearly 75%, breaching the 60% cap under the Fiscal Responsibility and Debt Limitation Act.
Long-term borrowing provides short-term relief by lowering refinancing risks but the expanding Pakistan Central Govt Debt underscores the urgent need for serious fiscal reforms and effective debt management to safeguard economic stability in the years ahead.
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