Pakistan’s per capita public debt burden increased by 13 percent to around Rs. 333,000 during the last fiscal year, underscoring mounting fiscal pressures as the country’s public debt remains a major challenge, according to the government’s Fiscal Policy Statement presented to Parliament.
The annual statement of the Ministry of Finance showed that per capita debt increased from Rs. 294,098 in fiscal year 2023–24 to Rs. 333,041 in fiscal year 2024–25. The increase reflects a rise of around Rs. 39,000 per person within a single year, calculated based on a population of 241.5 million, reported Express Tribune.
According to the report, total public debt increased from Rs. 71.2 trillion in June 2024 to Rs. 80.5 trillion by June 2025. The finance ministry said the rise was driven mainly by higher interest payments, which resulted from additional borrowing to finance spending beyond the limits prescribed under the law.
The statement acknowledged that “public debt dynamics remained a key challenge” during the year, noting that higher interest costs and exchange rate movements played a significant role in pushing debt levels higher.
Public debt as a percentage of gross domestic product increased from 67.6 percent in June 2024 to 70.7 percent by June 2025. The increase in both absolute and relative terms comes despite repeated government claims of fiscal discipline during the year.
Fiscal year 2024–25 marked the first full financial year of the government led by Prime Minister Shehbaz Sharif, who assumed office in April 2024. During the year, the federal fiscal deficit exceeded the statutory limit by a wide margin.
The report revealed that the federal fiscal deficit stood at 6.2 percent of GDP, compared with the legally mandated ceiling of 3.5 percent under the Fiscal Responsibility and Debt Limitation Act. In absolute terms, the government spent around Rs. 3.1 trillion, or 2.7 percent of GDP, over and above the allowed deficit limit.
Under the law, the finance ministry is required to present a fiscal policy statement to the National Assembly by the end of January each year, providing a comprehensive assessment of key fiscal indicators, including revenues, expenditures, deficits, and public debt. Unlike some countries where breaching debt or deficit limits can trigger legal or political consequences, Pakistan’s framework requires only disclosure to Parliament.
For fiscal year 2024–25, total federal expenditure was budgeted at Rs. 18.9 trillion, including current expenditure of Rs. 17.2 trillion. Actual current spending amounted to Rs. 15.8 trillion, mainly because interest payments remained below budgeted levels.
Interest payments totaled Rs. 8.8 trillion against a budgeted Rs. 9.8 trillion, reflecting 91 percent utilization, following a reduction in the policy rate during the year. Defense expenditure, however, exceeded its allocation, with actual spending close to Rs. 2.2 trillion against a budgeted Rs. 2.1 trillion.
Development expenditure, including net lending, was budgeted at Rs. 1.7 trillion, but actual spending stood at Rs. 1.4 trillion, or 84 percent of the allocation. Subsidies amounted to Rs. 1.3 trillion compared with a budgeted Rs. 1.36 trillion, while pension payments reached Rs. 911 billion against an allocation of Rs. 1 trillion.
On the revenue side, tax collection reached Rs. 11.7 trillion against a target of Rs. 13 trillion, reflecting about 90.5 percent realization. Non tax revenues exceeded expectations, rising to Rs. 5.1 trillion, or 104 percent of the budgeted amount, largely due to higher profits from the State Bank of Pakistan and stronger petroleum levy collections.
The ministry said the overall fiscal position improved compared with budget estimates due to provincial cash surpluses, central bank profits, and petroleum levy receipts. As a result, the consolidated fiscal deficit, including provincial accounts, was contained at 5.4 percent of GDP, lower than the budgeted 5.9 percent.