Public Debt Surges by Rs1.45 Trillion in First Five Months of FY25
Public Debt Surges by Rs1.45 Trillion in First Five Months of FY25
KARACHI: Pakistan’s public debt has reached Rs70.366 trillion, according to data provided by the State Bank of Pakistan (SBP). This figure increased by 2.1% (Rs1.452 trillion) in the first five months of the current financial year, as reported by The News on Tuesday.This increase resulted from the government’s expenditure demands surpassing its revenue collection and the necessity to repay external debt. As of June 30, 2024, the aggregate debt was Rs68.914 trillion.
By the end of November, the center’s total debt stock had increased by 11% year over year (YoY) and 1.8% month over month.According to Awais Ashraf, director of research at AKD Securities Limited, in November 2024, the federal government’s expenditure requirements exceeded revenue collection, which led to an increase in government debt. Nevertheless, he stated that the government repaid $434 million in external debt last month.
Ashraf maintained that the government has shifted its debt composition toward a longer tenure by increasing long-term debt by Rs1.8 trillion and reducing reliance on T-bills by Rs544 billion in the context of local debt.The central bank data indicated that the domestic debt increased by 3.0% from Rs47.16 trillion a year ago to Rs48.585 trillion during July to November FY25. After November, this signifies a 2.86% month-over-month increase and an 18% year-over-year increase.
In the same vein, the central government’s external debt increased to Rs21.78 trillion during the first five months of FY25, a slight increase of 0.11%. Nevertheless, the foreign debt experienced a 2.91% year-over-year decrease and a 0.5 percent month-over-month decrease by the end of November.The Federal Board of Revenue (FBR) failed to achieve its November tax collection objective, collecting Rs852 billion instead of the anticipated Rs1,003 billion, resulting in a Rs151 billion deficit.
In December 2024, the SBP underscored the significance of fiscal reforms to expand the tax base and achieve targeted budgetary consolidation in a monetary policy statement. The SBP observed that the expenditure side would result in substantial savings in interest payments on domestic debt compared to budget estimates due to the declining yields. The reduced interest payments will help the government manage the fiscal deficit more effectively; however, the intended primary surplus will be difficult to achieve. Consequently, to achieve the annual revenue objective, substantial efforts and supplementary measures will be necessary.
The government intends to raise Rs5.25 trillion through the sale of treasury bills and bonds from January to March to satisfy its budgetary requirements and repay debt, as indicated by the auction calendar released by the SBP. The government intends to raise Rs2.2 trillion through the sale of Market Treasury Bills and Rs3.05 trillion through the auction of Pakistan Investment Bonds.
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