Pakistan’s total public debt rose sharply in the fiscal year 2025. The Finance Ministry reported an increase of Rs9.3 trillion. Debt as a percentage of GDP climbed to 74.5 percent, up from 70.9 percent the previous year. The rise reflects higher domestic borrowing and currency depreciation.
The ministry said the main reasons include a weaker rupee, high interest rates, and moderate inflation. These factors raised the real cost of borrowing. Meanwhile, slight GDP growth and higher primary surpluses helped limit the rise in guaranteed debt. External guaranteed debt remained almost stable in GDP terms.
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By June 2025, total public and guaranteed debt reached Rs84.79 trillion. Domestic debt contributed most, increasing faster than external loans. The government emphasized that reliance on domestic resources reduces foreign exchange risks and external repayment pressures.
The Finance Ministry expects debt to decrease in the coming years. It predicts the debt-to-GDP ratio will fall to around 70 percent in the current year and 63.3 percent by FY2028. Guaranteed debt is expected to drop from 3.8 percent of GDP to 2.5 percent by then.
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Officials said debt sustainability will rely on cautious economic management and fiscal discipline. Measures such as higher exports, foreign investment, remittances, and stable energy prices are expected to strengthen reserves and ease pressure on external accounts.