Pakistan government debt in December 2025 climbed to Rs78.5 trillion, reflecting continued borrowing pressures despite signs of fiscal improvement.
According to data released by the State Bank of Pakistan (SBP), total government debt increased by Rs641 billion, or 0.82%, by the end of December 2025. The figure rose from Rs77.8 trillion in June to Rs78.5 trillion in December. On a monthly basis, stock expanded by 1.3%, while year-on-year growth was 9.6%.
This increase came even though the government posted a budget surplus of Rs 542 billion, or 0.4% of GDP, for July–December FY26. In comparison, the same period last year recorded a deficit of Rs1.5 trillion.
Pakistan Government Debt December 2025
Domestic debt reached Rs55.4 trillion by December, up 1.63% compared to June. It also increased by 1.4% month-on-month and 11% year-on-year. The government relied heavily on Pakistan Investment Bonds (PIBs), sukuk, and Treasury bills, signalling continued dependence on local banking liquidity amid tight external financing conditions.
In contrast, external debt stood at Rs23.1 trillion. It declined by 1% in the first half of FY26 but rose 1.1% compared to the previous month. On an annual basis, it grew by 6.4%.
Gross public debt increased to Rs81.3 trillion by the end of the first half of FY26, up from Rs80.5 trillion in June. Meanwhile, total debt and liabilities reached Rs95.5 trillion, compared to Rs87.9 trillion a year earlier.
In dollar terms, Pakistan’s total outstanding external debt and liabilities rose to $138 billion by December 31, 2025, from $136 billion in June.
However, debt servicing showed some relief. Total servicing fell to Rs5.2 trillion during July–December FY26, compared to Rs6.9 trillion in the same period last year. Interest payments declined to Rs3.7 trillion from Rs5.5 trillion year on year.
Read: Debt Servicing Exceeds Defence and Development Spending
Despite these improvements, gross public debt surged to 70.7% of GDP in fiscal year 2025. This level exceeds the ceiling set under the Fiscal Responsibility and Debt Limitation Act.
Officials argue that the fiscal position is improving. The government says it retired Rs3.65 trillion in domestic debt ahead of schedule since late 2024. This move aimed to reduce refinancing risks and ease future pressure.
Still, elevated debt levels continue to limit fiscal space. High borrowing costs consume a significant portion of the annual budget. As a result, room for development spending and social programmes remains constrained.
External debt servicing also increased in the second quarter of FY26. Payments reached $4.1 billion, up from $3.5 billion in the previous quarter. Of this amount, $1.3 billion went toward interest payments, while $2.7 billion covered principal repayments.
