Govt debt rises by over Rs3 trillion in first seven months of FY25

ISLAMABAD: The federal government’s total debt has increased by more than Rs3 trillion in the first seven months of the current fiscal year (FY25), largely due to significant domestic borrowing aimed at covering the fiscal deficit.

The latest data from the State Bank of Pakistan (SBP) reveals that the central government’s total debt, which includes both domestic and external liabilities, saw a 4.65 per cent increase during the review period.

As of January 2025, the overall debt had surged to Rs72.123 trillion, up from Rs68.914 trillion in June 2024, marking an increase of Rs3.209 trillion.

A notable rise was observed in domestic debt, which jumped by 6.5 per cent. The government’s domestic borrowings increased by Rs3.08 trillion, bringing the total to Rs50.243 trillion in January 2025 from Rs47.160 trillion in June 2024. This domestic debt includes Rs41.825 trillion in long-term loans and Rs8.352 trillion in short-term loans.

External debt, expressed in rupee terms, saw a modest rise of Rs126 billion during the same period, with the total external liabilities reaching Rs21.880 trillion by January 2025, compared to Rs21.754 trillion in June 2024.

According to the SBP, the Weighted Average Customer Exchange Rate for the US dollar was recorded at Rs278.9839 in January 2025, a slight increase from Rs278.7742 in June 2024.

Analysts have pointed out that the government is increasingly relying on domestic borrowing due to limited external financing.

In addition, the SBP has contributed over Rs3 trillion in profits to the federal government during the first half of FY25, providing much-needed fiscal relief and enabling the government to carry out its buyback operation of government securities.

In a related development, the Pakistan Stock Exchange (PSX) raised Rs91.60 billion for the government during the 19th Auction of GOP Ijarah Sukuk (GIS) on 6th March 2025. Bids amounting to Rs207.90 billion were submitted for various tenures of GIS, including 1-year Discounted, 3-, 5-, and 10-year Fixed Rental Rate (FRR), and Variable Rental Rate (VRR) Fresh Issues.

The government accepted Rs6 billion in bids for the 1-year GIS Discounted at a rate of 10.999 per cent, reflecting an increase of 75 basis points.

Additionally, Rs28 billion was raised through 3- and 5-year GIS FRR at rates of 11.4900 per cent and 11.9800 per cent, respectively, while Rs57 billion was secured through 10-year GIS VRR at a rate of 11.5470 per cent.

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