According to a recent report, Pakistan’s total public debt rose to USD 286.8 billion (PKR 80.6 trillion) in the fiscal year 2025, marking a nearly 13 percent increase compared to the previous year. This data comes from the annual debt review released by the Ministry of Finance.
Domestic and External Debt Overview
The report states that out of the total debt, PKR 54.5 trillion is domestic debt, while PKR 26 trillion is external debt. Domestic debt grew by 15 percent year-on-year, the lowest growth in three years. External debt increased by 6 percent, reaching USD 91.8 billion by June 2025.
Why External Debt is Rising
The growth in external debt is attributed to three main factors. First, new disbursements from the International Monetary Fund (IMF). Second, USD 1 billion in guaranteed commercial loans from the Asian Development Bank (ADB). Third, funding received from other international institutions.
Slow Economic Growth
The debt-to-GDP ratio rose to 70 percent from 68 percent in June 2024. The report links this increase to slower-than-expected nominal GDP growth and a drop in inflation, which has slowed the pace of economic expansion across the country.
Punjab Emerges as the Largest Borrower
Eighty-four percent of Pakistan’s total external public debt is held by the federal government, with the remaining 16 percent distributed among provincial and sub-national institutions. Among provinces, Punjab is the largest borrower with USD 6.18 billion, followed by Sindh at USD 4.67 billion, Khyber Pakhtunkhwa at USD 2.77 billion, Balochistan at USD 371 million, and Pakistan-administered Kashmir at USD 281 million.
