Final month, Prime Minister Imran and Shaikh had claimed that the general public debt remained unchanged at Rs36.4 trillion throughout July-October interval of this fiscal yr. PHOTO: FILE
ISLAMABAD:
Pakistan’s whole public debt remained Rs17 trillion greater than the utmost statutory restrict set by Parliament to make sure fiscal self-discipline over the last fiscal yr, however the authorities has nonetheless managed to scale back refinancing dangers by extending the tenor of home loans.
The Debt Coverage Assertion 2026 disclosed that, towards the utmost permissible debt restrict of 56% of Gross Home Product (GDP), public debt surged to 70.7%. The assertion has been ready for the knowledge of the Nationwide Meeting below the requirement of the Fiscal Accountability and Debt Limitation Act (FRDLA). Public debt was greater by Rs16.8 trillion, or 14.7% of GDP, in comparison with the restrict set within the FRDL legislation for fiscal yr 2024-25, the report confirmed.
The upper and unsustainable debt ranges are actually consuming half of the annual finances, leaving no area for productive financing and continually placing an extra tax burden on peculiar and already burdened segments of society.
The Federal Board of Income (FBR) can also be failing the prime minister and has not been capable of obtain even its downward revised tax targets, regardless of slowing refund funds, taking advances and benefiting from a beneficial tremendous tax judgment by the Federal Constitutional Court docket.
The FBR pooled Rs7.174 trillion through the JulyJanuary interval of the present fiscal yr, falling in need of the considerably downward revised goal by Rs347 billion. It additionally achieved hardly 10.5% development in collections over final yr’s revenues, which is half the speed required to fulfill the annual goal. The month-to-month goal was additionally missed by an Rs18 billion margin, regardless of the bonanza from the tremendous tax judgment.
In its debt coverage assertion, the Ministry of Finance apprised Parliament that the “debt-to-GDP ratio has elevated throughout fiscal yr 2025”. Nonetheless, the federal government assured Parliament that it remained dedicated to the aims of the FRDL Act, 2005, with the goal of lowering public debt to sustainable ranges over the medium time period.
The ministry mentioned this is able to be achieved by following a path of fiscal consolidation, producing main surpluses and narrowing the fiscal deficit to position debt on a downward trajectory.
Nonetheless, one other doc – the Fiscal Coverage Assertion 2026 – confirmed that the federal fiscal deficit was additionally 2.7% of GDP greater than the utmost prudent restrict outlined by Parliament below the FRDL legislation. The finance ministry mentioned the brand new debt administration technique contains maturity lengthening by way of greater issuance of medium- to long-term debt devices, together with zero-coupon bonds, rising the share of fixed-rate debt to handle rate of interest threat, deepening the home debt market, diversifying buyers and devices, and diversifying entry to worldwide markets by way of Panda bond issuance and frequent investor engagement.
The debt coverage assertion additional confirmed that the federal government has diminished refinancing dangers, primarily by extending the tenure of home debt. Exterior debt maturity marginally declined final fiscal yr attributable to an rising share of international industrial loans.
The report confirmed that the share of short-term Market Treasury Payments (MTBs) continued to say no from 24% as of June 2024 to 16.6% by the tip of the final fiscal yr. Because of this, the typical time to maturity of home authorities securities elevated from 2.8 years to three.8 years by June 2025.
The finance ministry mentioned that, by making the most of a declining rate of interest setting, the federal government targeted on changing maturing short-term Treasury Payments by way of elevated issuance of medium- to long-term Pakistan Funding Bonds (PIBs) and Sukuk devices.
Nonetheless, the typical time to maturity of exterior loans stood at round 6.1 years as of June 2025, barely decrease than the previous yr, because of the authorities taking $1.6 billion in further industrial loans. Because of this, industrial loans rose from $5.5 billion to $7.2 billion over the last fiscal yr.
The finance ministry mentioned that as of September 2025, 84% of loans had been sourced from multilateral and bilateral lenders.
General, there was additionally a decline within the share of exterior debt in whole public debt, from 34% to 32% within the final fiscal yr, in compliance with the 40% ceiling set below the Medium-Time period Debt Technique.
As of June 2025, whole public debt elevated by 13% year-on-year to Rs80 trillion, of which home debt stood at Rs54.4 trillion and exterior debt at Rs26.1 trillion.
The coverage assertion confirmed that exterior debt rose by 6% to $91.8 billion as of June 2025, reflecting a rise of $5.3 billion. The most important enhance in exterior debt got here from multilateral growth companions, together with the Worldwide Financial Fund (IMF), which rose by 8.7% or almost $4.3 billion. Borrowing from industrial banks elevated by $1.6 billion, largely attributable to a $1 billion mortgage secured towards an Asian Improvement Financial institution (ADB) policy-based assure.
Greater than half of Pakistan’s exterior debt is owed to multilateral growth monetary establishments, together with the IMF. The second-largest supply is bilateral companions, together with the Paris Membership and bilateral nation deposits, accounting for round 26% of exterior debt, in response to the finance ministry.
The report confirmed that over the last fiscal yr, whole home debt elevated by Rs7.3 trillion to Rs54.4 trillion, representing an increase of 16%.
