Pakistan’s Central Government Debt Rises to Rs. 77 Trillion in October – Complete Analysis & Economic Breakdown
Pakistan’s central government debt has increased once again, reaching a massive Rs. 77 trillion in October 2025, according to fresh data released by the State Bank of Pakistan (SBP). This marks a 0.5% month-on-month increase, reflecting constant borrowing pressures, rising interest payments, and heavy reliance on domestic financing.
Compared to last year, the situation looks more concerning. The debt level has jumped 11.4% year-on-year, rising from Rs. 69.1 trillion in October 2024. This sharp increase highlights the persistent fiscal challenges Pakistan continues to face, despite improvements in some areas of the economy.
Interestingly, despite the month-on-month increase, the central government debt fell by Rs. 908 billion (1.16%) during July–October FY26, indicating slight improvement at the start of the fiscal year. Analysts believe this decline is due to lower government borrowing needs and better management of repayments during the first four months.
Central Government Debt – Key Highlights for October 2025
- Total Central Government Debt: Rs. 77 trillion
- Month-on-month increase: 0.5%
- Year-on-year increase: 11.4%
- Debt reduction in FY26-to-date: Rs. 908 billion
- Domestic debt share: Rs. 53.976 trillion
- External debt share: Rs. 23 trillion
These numbers confirm that Pakistan’s debt burden continues to grow, driven largely by rising borrowing costs, currency instability, and limited foreign inflows.
Domestic Debt Rises to Rs. 53.976 Trillion – 14.3% Higher Than Last Year
Pakistan’s domestic debt remains the largest component of the overall debt stock. By the end of October 2025:
- Domestic debt reached Rs. 53.976 trillion
- This is a 14.3% year-on-year increase
- The debt rose 1% month-on-month
- But it fell 0.91% compared to June 2025
The slight reduction since June indicates lower domestic borrowing by the government due to:
- Moderated fiscal financing needs
- Higher SBP profit transfers
- Controlled expenditure in early FY26
- Better liquidity through treasury operations
However, the overall upward trajectory highlights Pakistan’s dependency on domestic borrowing instruments such as PIBs, treasury bills, NSS, and Sukuk bonds.
External Debt Stands at Rs. 23 Trillion – Mixed Trends in FY26
Pakistan’s external debt stood at Rs. 23 trillion by October 2025.
External Debt Changes
- Up 5.1% year-on-year
- Down 0.8% month-on-month
- Down 1.76% since June 2025
These numbers show that while external debt is increasing annually, it has slightly decreased in recent months. The decline reflects:
- Limited foreign financing
- Slower external loan disbursements
- Reduced short-term repayments
- Stable exchange rate movement in FY26
However, the country’s reliance on external borrowing remains a long-term challenge, especially when foreign exchange reserves do not grow at the same pace.
Pakistan Posts Fiscal Surplus in July–September FY26
Despite the rising debt burden, Pakistan managed to post a fiscal surplus of 1.6% of GDP (Rs. 2.1 trillion) in the first quarter of FY26.
This surplus is slightly lower than the 1.7% surplus recorded last year but is still a positive sign for the economy, supported mainly by:
- SBP’s record profits
- Higher dividends from financial operations
The central bank transferred Rs. 2.42 trillion in profits to the government, significantly improving the fiscal position.
These profits are reportedly driven by:
- Large open market operation (OMO) positions
- High interest rate environment
- Strong returns on government securities
While the fiscal surplus provides temporary relief, it is not sustainable without structural revenue improvements.
Government Revenues Remain Under Pressure – FBR Misses Target
Despite achieving a fiscal surplus, overall government revenue collection remains weak. The Federal Board of Revenue (FBR) missed its collection target during the first four months (July–October FY26).
Revenue Performance
- Target (Jul–Oct FY26): Rs. 4.108 trillion
- Actual collection: Rs. 3.835 trillion
- Shortfall: Rs. 274 billion
The revenue shortfall is mainly due to:
- A decline in domestic sales tax collection
- Slower economic activity in certain sectors
- Import compression due to high duties
- Reduced consumer spending
However, year-on-year comparison offers a small positive sign. FBR’s revenue collection increased 12% compared to July–October FY25.
Why Pakistan’s Debt Keeps Rising – Key Reasons
The rise in Pakistan’s total debt is driven by several structural and economic factors:
1. High Interest Rates
Pakistan’s policy rate remains one of the highest in the region, increasing debt servicing costs substantially.
2. Depreciation of the Rupee
Although the rupee has stabilized, past depreciation continues to inflate external debt calculations.
3. Persistent Fiscal Deficits
Chronic deficits force the government to borrow heavily each year.
4. Heavy Reliance on Domestic Borrowing
Due to limited foreign inflows, the government depends on domestic banks and investors to finance deficits.
5. Rising Repayment Obligations
Short-term domestic bills and external loans require constant refinancing.
6. Weak Revenue Growth
FBR’s inability to meet targets increases borrowing pressure on the government.
Impact of Rising Debt on Pakistan’s Economy
A growing debt burden has multiple long-term consequences:
1. Higher Debt Servicing Costs
A huge chunk of Pakistan’s annual budget goes to paying interest, leaving little for development.
2. Reduced Fiscal Space
The government cannot invest in infrastructure, health, and education due to borrowing needs.
3. Pressure on IMF Programs
High debt affects Pakistan’s negotiations with global lenders.
4. Slower Economic Growth
Private sector credit gets crowded out due to heavy government borrowing.
5. Risk of Debt Sustainability Concerns
If borrowing continues at this pace, debt-to-GDP ratios may cross critical levels.
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The Road Ahead – What Pakistan Needs to Do
Experts believe Pakistan must introduce deep structural reforms to control debt growth:
- Boost tax collection through broadening the tax base
- Reduce dependence on domestic banks
- Encourage foreign investment and long-term financing
- Cut non-development expenditures
- Improve export competitiveness
- Strengthen public sector governance
Without sustained reforms, Pakistan may continue facing fiscal and debt-related pressures in FY26 and beyond.
Conclusion – Rising Debt Signals Ongoing Fiscal Challenges
Pakistan’s central government debt reaching Rs. 77 trillion is a clear signal of ongoing financial challenges despite temporary improvements in fiscal performance.
While domestic and external debt trends show small monthly improvements, long-term sustainability remains a major concern.
The coming months will be crucial as Pakistan tries to stabilize revenues, meet IMF commitments, control borrowing, and boost economic confidence.
FAQs – Pakistan’s Central Govt Debt Rises to Rs. 77 Trillion
1. What is Pakistan’s total central government debt as of October 2025?
Pakistan’s central government debt reached Rs. 77 trillion in October 2025, showing a 0.5% increase from the previous month and an 11.4% rise compared to October 2024.
2. How much did Pakistan’s debt increase year-on-year?
The debt grew 11.4% year-on-year, rising from Rs. 69.1 trillion in October 2024 to Rs. 77 trillion in October 2025.
3. Did Pakistan’s debt decrease during the first four months of FY26?
Yes. Despite the monthly rise, the debt actually fell by Rs. 908 billion (1.16%) from July to October FY26 due to reduced government borrowing needs.
4. What is the current level of Pakistan’s domestic debt?
Domestic debt reached Rs. 53.976 trillion by the end of October 2025, showing a 14.3% increase compared to the same month last year.
5. How much is Pakistan’s external debt as of October 2025?
External debt stood at Rs. 23 trillion, up 5.1% year-on-year but down 0.8% compared to the previous month.
