Pakistan’s total debt to reach PKR 79 trillion by June 2025: Report

The Shehbaz Sharif-led Pakistan government unveiled a three-year economic plan, which aims to increase the share of provinces in the federal budget from 39.4 per cent to 48.7 per cent by 2027, ARY News reported.

The plan also highlights the country’s debt burden, with total debts expected to reach PKR 79,731 billion by the end of the current fiscal year. Local loans are expected to increase by approximately PKR 7,671 billion, while foreign loans will rise by PKR 818 billion.

The Pakistani government has claimed it is working to reduce the debt burden, including re-financing and interest rate risk management.

According to the new plan, the provinces will receive Pakistani Rupees (PKR) 10,350 billion by fiscal year 2026-27 under the National Finance Commission (NFC) Award, as reported by ARY News.

This indicates an increase in provincial shares, with PKR 8,921 billion allocated for the next fiscal year, 2025-26, and PKR 10,350 billion by 2026-27.

A transfer of 39.4 per cent of the budget to provinces under the NFC Award will take place this fiscal year. The government has also acknowledged the need to revise the method of distributing resources to provinces under the NFC.

Earlier, Pakistan and the International Monetary Fund reached a three-year, USD 7 billion aid package deal, ARY News reported.

The new programme, which needs to be validated by the Fund’s Executive Board, should enable Pakistan to “cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth,” according to a statement by IMF.

A report, last month revealed that the Pakistani government’s borrowings in the first 11 months of the outgoing fiscal year have exceeded the combined figure of the two preceding fiscal years, Dawn reported.

This hefty borrowing, amounting to PKR 7.39 trillion from July 2023 to June 7, 2024, surpasses the government’s collective borrowings of PKR 7.16 trillion in the previous two fiscal years (FY23 and FY22).