Punjab's debt stock rises Rs25bn YoY
According to the Punjab Budget 2025-26 documents released on Monday, at the end of June 2025, Punjab's debt stock stood at Rs 1,710 billion, out of which Rs 1,709 billion was from external lenders, while Rs 1.29 billion was from domestic sources. Collectively, these loans represent 2.7 percent of Punjab's Gross State Domestic Product (GSDP).
Moreover, Punjab's total debt stock surged from Rs 1,685 billion (reported in June 2024) to Rs 1,710 billion (reported in June 2025) in 12 months. However, the domestic loans showed a decline from Rs 1.7 billion (reported in June 2024) to Rs 1.29 billion, a decrease of 22.5 percent. In contrast, external loans witnessed a gain from Rs 1,683 billion (reported in June 2024) to Rs 1,709 billion (reported in June 2025); in dollars, it amounts to US $6.10 billion.
The government's external debt primarily consists of concessional, long-term loans in foreign currency, acquired from various multilateral creditors like the World Bank, Asian Development Bank, Japan International Cooperation Agency and International Fund for Agricultural Development. Additionally, it includes loans from bilateral creditors such as China, Japan, and France.
These funds are borrowed by the federal government and then channelled to the Punjab government. This debt can be categorised broadly into project loans, which are intended for long-term public infrastructure investments and programme loans, which provide medium-term budgetary support and are often tied to specific expenditure and/or policy reforms.
The report highlighted that the government's external debt is derived mainly from two key sources: USD 4.81 billion from multilateral creditors, including the World Bank and the Asian Development Bank, as well as other sources; and US $1.29 billion from bilateral creditors, including China and other sources.
These figures consist of the US dollar equivalent value of the outstanding debt (which is denominated in various currencies) at the end of the current Financial Year. The external debt was denominated mainly in US dollars (68 percent), followed by Special Drawing Rights (23 percent), Japanese Yen (5 percent) and other currencies (4 percent).
As per the report, the agriculture, irrigation and livestock sector remained the major recipient of government borrowing, as its share constitutes 24 percent of the total outstanding followed by transport and communication 20 percent, education 19 percent, urban and community development at 17 percent, governance 11 percent, health 5 percent, energy 2 percent, tourism 1 percent, and industries and infrastructure 1 percent.
Copyright Business Recorder, 2025
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