Pakistan Federal Debt Jumps to Rs83.6tr Amid IMF Pressures

Pakistan’s federal debt has climbed to Rs83.6 trillion by the end of June, according to figures reported from the State Bank of Pakistan’s latest debt bulletin. The development has emerged as a major economic headline because the rise comes despite higher taxation, repeated IMF-backed reforms and tighter controls on some areas of government spending.

The reported figure covers the direct debt burden of the federal government and excludes certain loans, including liabilities connected with the International Monetary Fund and some bilateral creditors that are booked on the central bank’s balance sheet. The complete public debt position is expected to become clearer when the SBP releases the wider debt picture next month.

Compared with the previous fiscal year, federal government debt rose by Rs5.8 trillion, or 7.3 per cent, from Rs77.8 trillion to Rs83.6 trillion. The increase is even sharper when viewed over four years, with archived central bank data showing that the central government’s debt burden has expanded by Rs35.8 trillion since June 2022.

The State Bank’s bulletin forms the official basis for the latest figures, while fiscal numbers from the Ministry of Finance show that the debt stock has continued to rise even as gross federal revenues increased substantially. The report noted that Pakistan remained under IMF programmes during this period and that the tax burden rose across several segments, including petroleum levy, salaried taxpayers, real estate and the corporate sector.

Domestic borrowing remained the largest driver of the debt profile. The government’s domestic debt increased from Rs54.5 trillion in June 2025 to Rs59.5 trillion in one fiscal year, reflecting a rise of around Rs5 trillion. External debt also moved upward, rising from Rs23.4 trillion to Rs24.2 trillion, although the pace was contained partly by the appreciation of the rupee against the US dollar.

The report also highlighted a key policy contradiction: revenues have improved, but expenditure pressures remain heavy. Debt servicing, social protection commitments, federal spending on devolved areas and development schemes of provincial nature have kept fiscal needs elevated, leaving limited room for productive investment.

Pakistan’s debt sustainability remains a serious concern because interest payments consume a large share of the federal budget. For the current fiscal year, more than Rs8 trillion has been allocated for debt servicing, while another Rs8.8 trillion is expected to be transferred to provinces under the National Finance Commission arrangement.

The legal framework also adds pressure on policymakers. Under the Fiscal Responsibility and Debt Limitation Act, the government is required to steadily reduce debt as a percentage of GDP until it reaches the long-term statutory target, but successive administrations have struggled to meet that requirement.

For Pakistan’s economy, the latest debt numbers carry direct implications for inflation management, public investment, taxation policy and future borrowing costs. A larger debt pile can limit the government’s ability to fund education, health, infrastructure and job creation, while keeping the country dependent on external financing and rollover arrangements.

The next major test will come when the complete public debt data is released and when the government presents its next fiscal strategy under IMF oversight. Pakistan will need stronger revenue discipline, better expenditure choices and credible debt management if it wants to reduce pressure on citizens while restoring long-term economic stability.