Pakistan’s debt story took another turn in April as central government debt surged past PKR 77 trillion, according to the latest data from the State Bank of Pakistan. That’s a 12.7% increase over the past year — and a clear sign that while some fiscal controls may be in place, the debt engine hasn’t cooled.
So, where’s all the money coming from?
Domestic debt: the rising anchor
Domestic debt hit PKR 52.5 trillion, growing 18.1% year-on-year. On a month-on-month basis, it rose by 2%, reflecting the government’s sustained dependence on domestic borrowing to bridge fiscal shortfalls.
What’s particularly noteworthy is the soaring share of Pakistan Investment Bonds (PIBs) — now at PKR 34.3 trillion, up a massive 29.3% year-on-year.
That’s the highest annual increase among all domestic instruments and suggests that the government is doubling down on longer-tenor borrowing, possibly to lock in funding before interest rate dynamics shift further. It also signals confidence in institutional demand for longer-term paper.
External debt: slower growth
External debt now stands at PKR 22.4 trillion, up just 3.9% year-on-year — a far more modest increase. Interestingly, IMF obligations declined by 4.7% as compared to the previous year, dropping to PKR 2.34 trillion. That could reflect recent repayments or a recalibration in disbursement schedules.
A new debt composition story
A quiet revolution may be underway in how the government structures its debt. While market treasury bills dipped by 9.4% as compared to the previous year, the PIBs and ijara sukuks saw double-digit growth.
Currency and GDP trends
The PKR/USD rate remained stable at 281, while the debt-to-GDP ratio inched up to 68.4%, from 67.2% a year ago. It's a marginal rise, but one that reflects growing liabilities without proportional economic expansion.
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