PTBP Web Desk
The federal government’s total debt stock decreased by Rs 456 billion in October 2024, driven primarily by the record profit transfer from the State Bank of Pakistan (SBP) and sustained efforts in debt servicing. This marks a notable development in the country’s fiscal management, offering some relief amid ongoing economic challenges.
According to the latest data released by the SBP on Wednesday, the central government’s total debt, encompassing both domestic and external components, fell to Rs 69.114 trillion in October 2024. This is a decrease from Rs 69.570 trillion recorded in September 2024. This decline comes after the total debt had surpassed the Rs 70 trillion mark in August, raising concerns among financial analysts and policymakers.
A significant factor in this reduction is the unprecedented profit transfer of over Rs 3 trillion from the SBP to the federal government. This transfer has not only bolstered the government’s fiscal resources but also contributed substantially to reducing the debt burden.
Breakdown of Domestic and External Debt
The debt stock reduction was observed in both domestic and external components, with domestic debt showing a more pronounced decline.
• Domestic Debt: Borrowings from domestic sources fell by Rs 305 billion, decreasing from Rs 47.536 trillion in September 2024 to Rs 47.231 trillion in October 2024. This reduction indicates an improved cash flow and reduced reliance on internal borrowing.
• External Debt: The external debt stock, calculated in rupee terms, dropped by Rs 150 billion during October. It stood at Rs 21.884 trillion at the end of the month compared to Rs 22.034 trillion in September 2024. The minor fluctuation in the exchange rate had little impact on this reduction, with the Weighted Average Customer Exchange Rate for the US dollar recorded at Rs 277.7488 in September and Rs 277.8517 in October.
Despite the monthly decline in debt stock, the cumulative debt for the federal government on a Year-to-Date (YTD) basis has risen. Since June 2024, the total debt has increased by Rs 200 billion, climbing from Rs 68.914 trillion to Rs 69.114 trillion as of October 2024. This trend underscores the need for sustained fiscal measures to address long-term debt challenges.
Financial analysts have highlighted the importance of this decline in debt stock as a positive development, albeit with caution. They emphasized the need for continued and sustainable debt management strategies to navigate the persistent economic difficulties faced by Pakistan. The record profit transfer from the SBP has been lauded as a critical intervention, yet experts warn that reliance on such one-time measures cannot replace structural reforms.
The government’s efforts to reduce domestic borrowing are seen as a step in the right direction. However, managing external debt remains a challenge, particularly in the context of exchange rate volatility and the country’s obligations to international creditors.
To maintain this encouraging trend, the federal government must adopt a balanced approach to debt management. This includes enhancing revenue generation, optimizing expenditure, and implementing reforms to ensure long-term economic stability. Collaborative efforts between fiscal and monetary authorities will be essential to achieve sustainable debt levels and foster economic growth.
For more insights into Pakistan’s economic challenges, explore SBP’s official website. Related developments in global debt management can be found on the International Monetary Fund portal.
