RIZWAN BHATTI

KARACHI: The federal government’s total debt stock surged by over Rs 3 trillion during the first seven months of the current fiscal year (FY25), primarily due to substantial borrowing from domestic sources to bridge the fiscal deficit.

According to the latest issued by the State Bank of Pakistan (SBP), the central government’s total debt comprising both domestic and external liabilities climbed by 4.65 percent during the first seven months of FY25. The overall debt stock surged to Rs 72.123 trillion in January 2025, up from Rs 68.914 trillion in June 2024, showing an increase of Rs 3.209 trillion.

During the review period, a major increase was recorded in domestic debt, which rose by 6.5 percent. In absolute terms, the federal government’s borrowings from the domestic market grew by Rs 3.08 trillion, reaching Rs 50.243 trillion in January 2025, up from Rs 47.160 trillion in June 2024. This domestic borrowing comprised Rs 41.825 trillion in long-term loans and Rs 8.352 trillion in short-term loans.

External debt, measured in rupee terms, saw a slight rise of Rs 126 billion during the first seven months of FY25, bringing the total external debt to Rs 21.880 trillion by the end of January 2025 as against Rs 21.754 trillion in June 2024.

According to the State Bank of Pakistan (SBP), the Weighted Average Customer Exchange Rate for the US dollar was Rs 278.9839 in January 2025, slightly up from Rs 278.7742 in June 2024.

Analysts observed that, with limited external borrowing, the federal government is relying more heavily on domestic resources to meet its financial obligations. In the first half of this fiscal year, the SBP has contributed over Rs 3 trillion in profits to the federal government, providing crucial fiscal support that also makes a cushion for the government to conduct the buyback operation of government securities.

Meanwhile, Pakistan Stock Exchange (PSX) raised Rs 91.60 billion for the federal government in the 19th Auction of GOP Ijarah Sukuk (GIS) held on Mar 6, 2025. Overall bids worth R 207.90 billion were received in the auction for one year GIS Discounted, 3-, 5- and 10-year GIS Fixed Rental Rate (FRR) Fresh Issue and 3-, 5- and10-year GIS Variable Rental Rate (VRR) Fresh Issue. The government accepted bids amounted to Rs 6 billion for 1-year GIS Discounted at 10.999, up by 75 bps.

An amount of Rs 28 billion borrowed through 3-year and 5-year GIS FRR at 11.4900 percent and 11.9800 percent respectively. In addition, an amount of Rs 57 billion raised through 10-year GIS VRR at 11.5470 percent.