Karachi, October 9, 2024 – Pakistan’s debt burden has surged past Rs 70 trillion by the close of August 2024, according to a report released by the State Bank of Pakistan (SBP).
This alarming rise is primarily driven by extensive borrowing to finance Pakistan’s fiscal deficit, reflecting the government’s reliance on both domestic and external debt.
The SBP report highlights that Pakistan’s overall debt—comprising both domestic and external obligations—swelled by 2.1% during the initial two months (July-August) of the fiscal year 2025 (FY25). As of August 2024, the federal government’s total debt stood at an unprecedented Rs 70.362 trillion, up from Rs 68.914 trillion in June 2024, marking a staggering increase of Rs 1.448 trillion in just two months.
A deeper examination of Pakistan’s debt data reveals that while both domestic and external debt contributed to the surge, the majority of the growth was concentrated in domestic borrowings. The government’s domestic debt surged to Rs 48.34 trillion by August 2024, compared to Rs 47.16 trillion in June of the same year, registering a sharp increase of Rs 1.179 trillion.
On the external front, Pakistan’s debt in rupee terms grew by 1.2%, or Rs 269 billion, during the first two months of FY25. By the end of August 2024, Pakistan’s total external debt had climbed to Rs 22.023 trillion, up from Rs 21.754 trillion in June 2024. The SBP report also noted a slight change in the US dollar exchange rate, with the Weighted Average Customer Exchange Rate hovering around Rs 278.5769 in July 2024, compared to Rs 278.3668 in June 2024.
Topline Securities provided further insights, noting that the Central Bank’s Government Debt-to-GDP ratio has decreased on a year-on-year basis—from 73% in August 2023 to 65% in August 2024. This improvement is largely attributed to a significant reduction in the external debt-to-GDP ratio, which fell from 27.6% of GDP in August 2023 to 20.2% in August 2024. The decline in external debt is mainly due to the appreciation of the Pakistani rupee, which strengthened from PKR/USD 305.61 in August 2023 to 278.57 in August 2024.
As Pakistan navigates its debt challenges, the government will need to implement strategic fiscal reforms to curb this rising tide and mitigate further economic risks.