ISLAMABAD: The government on Monday admitted before parliament that the country’s public debt increased, the debt-to-GDP ratio worsened, and per capita debt rose in 2024-25 despite fiscal consolidation and improved macroeconomic conditions.
As a consequence, the government also testified before the National Assembly that it had been in perpetual breach of the Fiscal Responsibility and Debt Limitation Act (FDRLA) for many years, and the violation continued into FY25.
“From June 2024 to June 2025, the total public debt increased from Rs71.25 trillion to Rs80.52tr mainly due to an increase in interest payments. Accordingly, the debt per capita also increased from Rs294,098 in FY24 to Rs333,041 in FY25,” the Ministry of Finance (MoF) reported in its two simultaneous fiscal policy and debt policy statements laid before the National Assembly.
It said the FDRLA 2005 required a debt-to-GDP ratio of “60pc in 2017-18 with a reduction of 0.5pc every year till 2022-23 and 0.75pc every year till 2032-33 to reduce the ratio to 50pc and thereafter maintaining it at 50pc or less”. However, the ministry reported that total public debt increased both in percentage and absolute terms.
Debt per capita hits Rs333,041
It said the total public debt-to-GDP ratio increased to 71.7pc by the end of FY25 from 67.6pc in FY24. Likewise, the total debt of the government increased to 64.3pc of GDP in FY25 against 61.8pc in FY24. The government breached the law not only in these two years but earlier as well. The MoF said the government debt-to-GDP ratio should have been lower than 56.75pc and 56pc in FY24 and FY25, respectively.
In absolute numbers, the total public debt increased by around Rs9.3tr to Rs80.52tr in FY25, compared with Rs71.25tr in FY24, showing an increase of about 13pc, the report said. Of this, about Rs2.38tr increase was caused by exchange rate impact and about Rs8.9tr interest expense. This was despite about Rs1.8tr of primary surplus and about Rs200bn cash balances during the year.
The ministry said that, overall, due to fiscal consolidation policies, the growth in the debt stock had stabilised, compared with 25pc in FY22 and FY23.
This was achieved by containing all expenditure heads except defence, which exceeded its budget allocation. “In FY25, defence expenditure was budgeted at Rs2.122tr; however, actual expenditure amounted to Rs2.192tr, representing 103.4pc of the budget estimate,” the report said.
On the other hand, mark-up payments were recorded at Rs8.887tr against the budget estimate of Rs9.775tr, reflecting more than 9pc savings.
Published in Dawn, March 31st, 2026
