Karachi, February 10, 2025 – The government of Pakistan has disbursed a staggering Rs 5.14 trillion as mark-up on loans acquired from both local and international financial institutions during the first half (July-December) of the ongoing fiscal year 2024-25.
This substantial financial obligation underscores the challenges faced by the government in managing debt repayments.
According to a report issued by the finance ministry, the mark-up payment witnessed a significant increase of 22% from Rs 4.22 trillion in the corresponding period of the previous fiscal year. The government continues to grapple with rising financial burdens as debt servicing costs escalate.
Mark-up payments on domestic loans saw a sharp surge of 26%, reaching Rs 4.675 trillion in the first half of the current fiscal year, compared to Rs 3.718 trillion in the same period last year. However, the government observed a decline of 7% in mark-up payments on foreign loans, which dropped to Rs 467 billion from Rs 502 billion in the corresponding period of the previous fiscal year.
Debt servicing remains the largest component of the government’s current expenditures. Total current expenditures increased by 18% to Rs 10.12 trillion in the first six months of FY25, compared to Rs 8.56 trillion in the same period last year. The government is striving to balance fiscal discipline while addressing growing economic needs.
On the other hand, government spending on subsidies witnessed a notable decline, plunging by 37% to Rs 237 billion in the first half of FY25, down from Rs 375 billion in the same period last year. The reduction in subsidies reflects the government’s effort to manage fiscal resources efficiently while still aiming to provide relief to the public amid rising inflation.
The government also allocated increased funds for defence services, with expenditures rising by 17.57% to Rs 890 billion during the first half of FY25, compared to Rs 757 billion in the corresponding period of last year. Additionally, pension payments climbed by 11.38% to Rs 450 billion, up from Rs 404 billion in the same period last year.
Furthermore, the government’s administrative expenses grew by 12.25% to Rs 339 billion in the first six months of FY25, compared to Rs 302 billion in the same period last fiscal year. These figures highlight the ongoing financial pressures as the government navigates economic challenges while maintaining essential services and obligations.