Debt stock soars to Rs71.6trn by Dec-end

KARACHI: The federal government’s total debt stock soared to Rs 71.6 trillion by the end of December 2024, driven primarily by borrowing to finance the fiscal deficit.

According to a statistic released by the State Bank of Pakistan (SBP) on Friday, the central government’s total debt, comprising domestic and external liabilities, rose by 4 percent during the first half of the fiscal year 2025 (FY25).

Overall, the federal government’s total debt stock crossed the Rs 71 trillion mark and surged to Rs 71.647 trillion by the end of December 2024 compared to Rs 68.914 trillion as of June 2024, depicting an increase of Rs 2.733 trillion.

Oct govt debt stock drops Rs456bn to Rs69.114trn MoM

The growth in debt stocks was predominantly attributed to domestic borrowings, which rose by 5.7 percent or Rs 2.723 trillion to Rs 49.883 trillion in December 2024 from Rs 47.16 trillion in June 2024. The domestic debt comprised long-term loans worth Rs 41.106 trillion and short-term borrowings amounting to Rs 8.696 trillion.

External debt, in rupee terms, saw a marginal increase of Rs 10 billion during the first half of FY25, reaching Rs 21.764 trillion by the end of December 2024 compared to Rs 21.754 trillion in June 2024. The SBP reported that the Weighted Average Customer Exchange Rate of the US dollar was Rs 278.3668 in June 2024 and Rs 278.5672 in December 2024.

Analysts noted that despite a notable 26 percent increase in Federal Board of Revenue (FBR) revenues during July-December FY25, the shortfall in achieving the tax collection target compelled the government to resort to additional borrowing to finance the fiscal deficit.

The SBP has emphasized the need for a sharp acceleration in tax revenue growth to meet the annual targets. Achieving the primary balance target remains a significant challenge for the government.

However, the SBP anticipates that lower-than-budgeted interest payments may help contain the overall fiscal deficit within its projected limits.