Pakistan’s federal government debt reached Rs. 73.036 trillion in February 2025, marking a 12.7% increase compared to February 2024. The State Bank of Pakistan (SBP) reported this rise, highlighting growing fiscal pressures. Last year’s debt stood at Rs. 64.806 trillion, indicating a significant YoY escalation. This surge reflects persistent budget deficits and reliance on borrowing to meet financial obligations.
Monthly Debt Growth of 1.3%
On a month-on-month basis, the debt stock rose by 1.3%, adding Rs. 912 billion in February 2025. The previous month’s debt was Rs. 72.124 trillion, showing continuous accumulation. Such monthly increments suggest sustained borrowing trends, possibly due to rising expenditures or revenue shortfalls. This pattern could strain future budgets, necessitating stricter fiscal discipline to curb further escalation.
Domestic Debt Jumps by 19.6% Annually
Domestic debt surged by 19.6%, climbing from Rs. 42.671 trillion in February 2024 to Rs. 51.022 trillion in February 2025. This sharp rise indicates increased reliance on local borrowing, possibly through treasury bills and bonds. High domestic debt can crowd out private sector credit, limiting economic growth. Policymakers must address this trend to ensure sustainable financial stability.
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Monthly Domestic Debt Rises by 1.5%
Compared to January 2025, domestic debt increased by 1.5%, reflecting ongoing government borrowing from local sources. This steady monthly growth suggests persistent budget deficits or refinancing needs. Reliance on domestic debt can lead to higher interest payments, further straining public finances. Authorities must explore measures to enhance revenue and reduce expenditure imbalances.
Long-Term Debt Up by 23.4%
Long-term public debt rose sharply by 23.4%, from Rs. 34.618 trillion in February 2024 to Rs. 42.721 trillion in February 2025. This indicates increased issuance of long-term bonds and securities. While long-term debt provides stability, excessive accumulation risks future fiscal sustainability. The government must balance borrowing terms to avoid repayment pressures in coming years.
Short-Term Debt Grows by 3.5%
Short-term debt increased by 3.5%, from Rs. 7.954 trillion to Rs. 8.231 trillion over the year. This includes treasury bills and other short-term instruments. While lower than long-term growth, it still reflects liquidity needs. High short-term debt requires frequent refinancing, exposing the government to interest rate fluctuations. Managing this debt maturity profile is crucial for financial stability.
Implications of Rising Public Debt
The escalating debt burden raises concerns over Pakistan’s fiscal health. High debt levels increase interest payments, diverting funds from development projects. This could hinder economic growth and social welfare programs. Additionally, rising domestic borrowing may tighten liquidity for businesses, slowing private investment. Sustainable debt management strategies are essential to prevent a debt crisis.
Need for Fiscal Reforms
To curb debt growth, Pakistan must implement structural reforms. Enhancing tax collection, reducing non-essential expenditures, and improving public sector efficiency are critical. Privatization of loss-making state enterprises could also ease fiscal pressures. Strengthening economic growth through exports and foreign investment can reduce reliance on borrowing, ensuring long-term stability.
Conclusion
Pakistan’s central government debt exceeding Rs. 73 trillion underscores urgent fiscal challenges. With both domestic and long-term debt rising sharply, policymakers must prioritize reforms to ensure sustainable economic health. Without corrective measures, mounting debt could lead to severe financial instability, affecting the nation’s growth prospects. Immediate action is necessary to restore fiscal balance and secure Pakistan’s economic future.
