KARACHI:

In contrast to the government’s claims of improving fiscal conditions, Pakistan’s central government debt climbed to Rs78.5 trillion by the end of December 2025, marking a 9.6% year-on-year increase and a 1.3% rise on a monthly basis, driven primarily by the perpetual increase in domestic borrowing, according to the State Bank of Pakistan (SBP).

Pakistan’s central government debt stood at Rs78,529 billion as of December 2025, reflecting a 1% increase from the previous month and a 10% increase YoY, noted Ismail Iqbal Securities.
The domestic debt reached Rs55.4 trillion, reflecting an 11% annual increase and a 1.4% month-on-month expansion, underscoring the government’s continued reliance on local financing sources amid tight fiscal conditions and ongoing external repayment pressures, according to data compiled by Topline Securities.

Within domestic liabilities, long-term debt surged to Rs46.6 trillion, up 13.3% year-on-year, as authorities maintained a strategy of lengthening the maturity profile to mitigate rollover risks. Permanent debt rose to Rs43 trillion, while unfunded debt increased to Rs3.16 trillion. Foreign currency-denominated domestic loans posted a modest rise to Rs385 billion.

In contrast, short-term domestic debt grew at a slower pace, reaching Rs8.74 trillion, up only 0.6% year-on-year, although it recorded a sharper 4.6% monthly increase, suggesting temporary liquidity management through treasury instruments. Meanwhile, liabilities under Naya Pakistan Certificates declined significantly to Rs62 billion, down 23.3% annually, indicating reduced inflows through diaspora-focused savings schemes.

On the external side, the central government debt stood at Rs23.16 trillion, reflecting a 6.4% year-on-year increase and a 1.1% month-on-month rise. In dollar terms, external obligations climbed to $82.7 billion in December 2025, compared with $81.7 billion in November 2025, and marginally above $82.5 billion recorded in June 2025.

Analysts noted that the stronger growth in domestic debt compared with external liabilities reflects a deliberate policy tilt towards local financing amid volatile global financial conditions and ongoing engagement with multilateral lenders under reform programmes. However, the rising debt stock continues to underline structural fiscal imbalances, including persistent budget deficits and high interest payment obligations.

Furthermore, the Pakistani rupee posted a marginal rise of Rs0.01 against the US dollar to close at 279.66 in the inter-bank market. Meanwhile, gold prices in Pakistan moved higher, tracking gains in the international bullion market, although global prices trimmed earlier advances after strong US employment data dampened expectations of an early Federal Reserve rate cut.

In the local market, the price of gold per tola rose by Rs2,300 to reach Rs528,562, according to rates issued by the All-Pakistan Gems and Jewellers Sarafa Association. Similarly, the price of 10-gram gold increased by Rs1,972 to Rs453,156. Silver prices also moved upwards, with per-tola rate increasing by Rs120 to Rs8,735.

Adnan Agar, Director at Interactive Commodities, said gold prices came under pressure after stronger-than-expected US non-farm payroll data reduced the likelihood of a near-term rate cut. He noted that gold touched highs near $5,118 but later retreated towards the $5,047 level, with support seen around $4,800 and resistance near $5,200.