Karachi – Pakistan’s total debt surged to Rs 69.6 trillion at the end of July 2024, reflecting increased borrowing from domestic and international sources to cover the country’s fiscal deficit.
According to the State Bank of Pakistan (SBP), the federal government’s debt rose by 1 percent during the first month of the current fiscal year (FY25).
The debt stock, comprising both domestic and external liabilities, reached an unprecedented high of Rs 69.604 trillion by July 2024, marking a significant rise from Rs 68.914 trillion at the close of June 2024. This represents a Rs 690 billion increase in just one month, underscoring the financial pressures facing the government.
Domestic borrowing showed the largest jump, with an increase of 1.1 percent or Rs 537 billion, bringing the total to Rs 47.697 trillion. In June 2024, domestic debt stood at Rs 47.160 trillion. The breakdown reveals that the bulk of the debt stems from long-term loans, amounting to Rs 36.941 trillion, while short-term borrowing reached Rs 10.638 trillion.
External debt also witnessed an uptick, rising by 0.7 percent or Rs 153 billion, with the total stock climbing to Rs 21.907 trillion by the end of July. This increase was partly driven by a slight depreciation of the rupee, as the Weighted Average Customer Exchange Rate for the US dollar rose from Rs 278.3668 in June to Rs 278.7742 in July.
Financial analysts have highlighted that in the absence of significant external borrowing, the government has become increasingly reliant on domestic financing to meet its budgetary needs. Despite this, external debt is expected to rise further as Pakistan continues to receive foreign inflows. Earlier this year, the country successfully completed a $3 billion Standby Arrangement (SBA) with the International Monetary Fund (IMF) and secured a $7 billion long-term loan to support economic stability.
On a year-on-year basis, Pakistan’s total debt increased by 12.66 percent, or Rs 7.827 trillion, compared to Rs 61.777 trillion in July 2023. The rising debt levels point to the country’s ongoing fiscal challenges, as the government struggles to balance domestic expenditures with external obligations.
As of August 2024, Pakistan’s foreign exchange reserves stand at $14.74 billion, with the SBP holding $9.437 billion and commercial banks $5.3 billion. The SBP’s reserves grew by $33 million during the last week of August, offering some respite to the country’s foreign currency reserves amid mounting debt.
