Pakistan debt hits record Rs83.6tr by June

Pakistan's total federal government debt has climbed to a record level of nearly Rs84,000 billion, according to the latest data released by the State Bank of Pakistan (SBP). The government's total debt stood at Rs83,642 billion by June this year, up 7.4% compared with the same period last year. According to SBP data, the federal government's total debt was Rs77,888 billion in June last year. The debt burden continued to rise during the current year, reaching Rs81,955 billion by May, before increasing further to Rs83,642 billion in June. The latest figures underline the continued pressure on Pakistan's public finances as the government manages both domestic and external borrowing. Domestic debt crosses Rs59tr The federal government's local debt recorded the sharper annual increase. According to the central bank, domestic debt rose by 9.1% year-on-year to Rs59,441 billion by June. The increase in domestic borrowing accounts for the larger share of the overall rise in the government's debt burden. External debt Rs24.2tr Pakistan's federal government external debt also increased during the year, although at a slower pace than domestic debt. SBP data shows that external debt rose by 3.3% annually to Rs24,201 billion by June. Combined with domestic borrowing, the increase pushed the federal government's overall debt stock to its highest reported level of nearly Rs84 trillion. Experts warn of economic risks The continued rise in Pakistan's debt burden has raised concerns among economists and financial experts. Experts warn that if the country's borrowing continues to increase without a corresponding improvement in revenues, exports and economic growth, the mounting debt could become a 'debt trap' for the economy. The latest figures highlight the challenge facing policymakers as Pakistan attempts to manage debt repayments while creating fiscal space for economic growth and development.