Pakistan’s debt rose to PKR 70.3 trillion in Nov amid economic strain

Pakistan’s central bank has unveiled its debt profile for November, painting a sobering picture amidst the fiscal crisis. Total debt surged to PKR 70.3 trillion, marking a 1.8% increase from the previous month.

Domestic debt, comprising 67.1% of the central government’s total obligations, climbed 18.6% compared to the same month last year and increased 2.9% in a month.

The lion’s share of this debt is categorized as permanent debt, which accounts for 73.3% of the total domestic debt, amounting to PKR 35.6 trillion.

The permanent debt includes PKR 34.7 trillion locked in federal government bonds, PKR 475 billion from the SBP’s on-lending to the government against Special Drawing Rights (SDRs), PKR 393 billion in prize bonds, and PKR 3 billion in market loans.

The rise is primarily fueled by heightened long-term investments, with Pakistan Investment Bonds (PIBs) up 5.6% and GOP Ijarah Sukuk growing by 6.6%.

On the external front, despite better flow dynamics, external debt remains steep at PKR 21.8 trillion, accounting for 66.8% of GDP.

The bulk of this burden – PKR 21.5 trillion – comes from long-term obligations. A closer look reveals that over 80% of the external debt is owed to multilateral and bilateral lenders, with public debt dominating the mix.

On the external side, while flow dynamics have improved, total external debt remains high at PKR 21.8 trillion (66.8% of GDP), most of which is a long-term debt (PKR 21.5 trillion).

Looking at the breakdown of the external debt, more than 80% is owed to multilateral and bilateral lenders and is dominated by public debt.

These figures underscore the mounting pressure on Pakistan’s financial management. The rising domestic debt signals deep-seated budgetary imbalances as the country leans heavily on borrowing to cover fiscal shortfalls.

To recall, the government has lowered the target fiscal deficit from the revised 7.4% for FY24 to an unsustainable 6.9% of GDP for FY25.