A recent document released by Pakistan’s Ministry of Finance has shed light on the external debt situation of the country’s provinces during the first half of the current fiscal year (July–December 2025). The data highlights contrasting trends, with Punjab recording a reduction in its external liabilities, while the other three provinces—Sindh, Khyber Pakhtunkhwa (KP), and Balochistan—saw increases in their debt burdens.
According to the official figures, Punjab emerged as the only province to successfully reduce its external debt during this period. The province managed to bring down its liabilities by approximately 31 million US dollars, reflecting either improved fiscal management, repayment efforts, or a slowdown in new borrowing. This reduction stands in contrast to the overall rising debt trend observed in other parts of the country.
On the other hand, Sindh witnessed the most significant increase in external debt among all provinces. The province’s liabilities rose by about 494 million US dollars, indicating a substantial reliance on foreign borrowing during the six-month period. This sharp increase may be linked to development projects, infrastructure financing, or budgetary support needs, though the document does not detail the exact causes.
Khyber Pakhtunkhwa also experienced a notable rise in its external debt, which increased by 93 million US dollars. While not as large as Sindh’s increase, the growth still reflects mounting financial obligations for the province. Similarly, Balochistan’s external debt grew by 4 million US dollars, a comparatively smaller increase but still indicative of upward pressure on provincial liabilities.
The Finance Ministry’s report also includes data on Pakistan’s regions beyond the four provinces. It shows that Azad Jammu and Kashmir (AJK) recorded a decrease of 4 million US dollars in external debt, while Gilgit-Baltistan (GB) saw a slight reduction of 1 million US dollars during the same period. These reductions, though modest, suggest limited borrowing or partial repayments in these regions.
In terms of overall volume, Punjab continues to hold the largest share of external debt among all provinces despite its recent reduction. This is largely due to its size, population, and extensive development portfolio, which historically required significant foreign financing. The province’s ability to slightly reduce its debt, however, may be viewed as a positive sign in an otherwise challenging economic environment.
The broader context of these figures is Pakistan’s ongoing struggle with rising public debt. Recent reports indicate that the country’s total debt has crossed Rs 81 trillion, placing a heavy burden on the national economy. On a per capita basis, this translates into each پاکستانی شہری owing approximately Rs 325,000, underscoring the scale of the challenge.
Experts often point out that external borrowing, while necessary for development and economic stability, can become problematic if not managed carefully. Exchange rate fluctuations, interest rate hikes, and repayment obligations can significantly impact provincial and national budgets. Provinces with increasing external debt may face higher financial pressure in the coming years, particularly if revenue growth does not keep pace with liabilities.
The data also raises questions about fiscal discipline and resource allocation across provinces. While Punjab’s reduction may indicate prudent financial management, the rising debt levels in other provinces highlight the need for better planning, transparency, and sustainable borrowing strategies.
In conclusion, the Finance Ministry’s document presents a mixed picture of Pakistan’s provincial debt landscape. While Punjab has managed to slightly ease its burden, Sindh, KP, and Balochistan are facing increasing external liabilities. As Pakistan continues to navigate economic challenges, effective debt management at both federal and provincial levels will remain critical to ensuring long-term financial stability.
