The government debt outstanding is the debt that is to be serviced out of the Federal Consolidated Fund plus the debt with the IMF. It stands at Rs 75,042 billion as of February 2025, according to the figures released recently by the SBP.

The government debt consists of both domestic and external debt, as per the definition in the Fiscal Responsibility and Debt Limitation Act, amended up to 2022. There are three types of domestic debt, namely, permanent debt, unfunded debt and floating debt, distinguished primarily by the tenure of borrowing.

The absolute increase in government debt in the first eight months of 2024-25 is Rs 4,156 billion. This is higher than the total borrowing reported in the fiscal operations by the federal ministry of finance in the first three quarters of 2024-25.

The pattern of increase in government debt up to February in 2024-25 is very revealing. First, the external debt has shown exceptionally low growth of just over 1 percent, half of which is due to a small depreciation in the value of the rupee. This reflects clearly the difficulty in accessing external financing; especially, from private external lenders through bond floatations or commercial bank borrowing.

Second, the composition of domestic debt has changed substantially. The increase in long-term permanent debt........

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