ISLAMABAD (PEN) : In a significant economic update, Pakistan’s public debt has surpassed Rs74 trillion by the end of 2024, marking a major milestone as the government meets another condition set by the International Monetary Fund (IMF). The semi-annual report on public debt for FY 2024-25, released by the Ministry of Finance, reveals that the country’s debt has seen a sharp rise of Rs2,767 billion between July and December 2024.
Public Debt Breakdown: Domestic vs External
As of December 2024, Pakistan’s external debt stood at Rs24,130 billion, contributing to the total public debt. Domestic debt continues to dominate, accounting for 67.4% of the total debt at Rs49,883 billion. The remainder—32.6%—is from external sources.
Between July and December 2024, domestic debt saw a significant increase of Rs2,723 billion, while external debt rose by Rs44 billion. This rise in public debt is attributed to various financing mechanisms, including domestic borrowing.
Interest Payments and Debt Instruments
The government paid Rs5,142 billion in interest on the public debt during the reporting period, with a large portion—90%—allocated to servicing domestic debt. To finance its growing fiscal needs, Pakistan has relied heavily on long-term debt instruments such as Pakistan Investment Bonds and Ijarah Sukuk.
Furthermore, the government initiated a Government Securities Buyback & Exchange Program, which resulted in savings of Rs31 billion. This program involved the buyback of Rs1,000 billion in securities, helping to manage the rising debt burden.
Debt Maturity and Fiscal Deficit
The government’s strategy to manage debt maturity has shown a slight improvement. The average repayment period for domestic loans has increased from 2.9 years to 3.4 years, while the maturity period for external loans remains stable at 6.2 years.
Pakistan’s fiscal deficit for the period stood at Rs1,538 billion, which was primarily financed through domestic borrowing. The report also highlighted a positive development—Pakistan’s primary balance stood at Rs3,604 billion for July-December 2024.
Economic Outlook: Declining Inflation and Stable Exchange Rate
Despite the increasing public debt, the Ministry of Finance’s report outlines a few economic improvements. Inflation during the period averaged 7.2%, showing a decline compared to previous periods. Additionally, Pakistan has seen a reduction in the fiscal and current account deficits, with the exchange rate remaining stable. These positive trends could help mitigate the long-term effects of the rising debt.
Conclusion: IMF Compliance Amid Economic Challenges
This latest update comes as the government continues to comply with IMF conditions to secure funding and stabilize the country’s economy. The surge in public debt highlights the continuing fiscal challenges faced by the country, but with positive strides in inflation control and fiscal balance.
With the IMF’s oversight and continued borrowing, Pakistan is navigating a complex economic landscape, hoping for improvements that will ease the burden of public debt while fulfilling its financial commitments.
