KARACHI: Pakistan’s debt trajectory is more benefits than suggested by headline rupee figures, the finance ministry said on Tuesday, pointing to a falling debt-to-GDP ratio, lower refinancing risks and interest savings from early repayments.
The ministry said absolute debt levels will naturally rise with inflation and are not the best measure of sustainability. Instead, it highlighted the debt-to-GDP ratio, which has eased to 70 % in FY25 from 74 % in FY22. At the same time, the government prepaid Rs2.6 trillion in commercial and central bank debt before maturity helping reduce rollover risks and save “hundreds of billions” in interest costs.
The fiscal deficit narrowed to 6.2 %of GDP in FY25 from 7.3 % a year earlier, while Pakistan posted a primary surplus of 2.4 % of GDP for the second consecutive year. The ministry also cited a current-account surplus of $2 billion, the first in 14 years, as evidence of improved external resilience.
Prudent liability management and lower rates cut debt-servicing costs by Rs850 billion compared with budget estimates, it said. Average debt maturity improved to 4.5 years in FY25 from four years a year earlier.
Despite a 13 % increase in total debt stock, below the five-year average growth of 17 per % the ministry said much of the rise reflects valuation effects from exchange-rate changes and inflows tied to IMF and commodity support facilities rather than new net borrowing.
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