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Economic development

Punjab's External Debt Reaches $6.1 Billion: A Breakdown of the Province's Financial Outlook

Strategic Insights

— 2 min read

The Punjab government's external debt stands at approximately $6.1 billion, primarily sourced from long-term, concessional loans extended by multilateral and bilateral lenders, including the World Bank, Asian Development Bank (ADB), Japan International Cooperation Agency (JICA), and the International Fund for Agricultural Development (IFAD), as well as bilateral partners like China, Japan, and France, according to the official budget documents. The province's debt stock has increased by 1.5% year-on-year to Rs 25 billion during the fiscal year 2024-25, and is expected to reach Rs 1,710 billion by the end of the current fiscal year, with 2.7% of the Gross State Domestic Product coming from domestic lenders.

Key Takeaways:

  • Punjab's external debt has risen by Rs 26 billion over the year, from Rs 1,709 billion to Rs 1,735 billion, as of June 2025.
  • The majority of Punjab's external debt is denominated in US dollars, making up 68% of the total portfolio, followed by Special Drawing Rights (SDRs) at 23%, Japanese yen at 5%, and other currencies making up 4%.
  • The province's sector-wise debt allocation reveals that agriculture, irrigation, and livestock received the largest share of debt-financed investments, accounting for 24% of total outstanding loans.
  • The debt-to-GSDP ratio remains low, with the majority of borrowing being concessional, aimed at funding key development projects.
  • Punjab's domestic debt decreased by Rs 0.41 billion, a drop of 22.5%, while external debt rose by Rs 26 billion over the year.
  • Of the total debt, Rs 1,709 billion is from external sources, while Rs 1.29 billion is from domestic lenders, making up 2.7 percent of Punjab's Gross State Domestic Product.
  • Punjab owes $4.81 billion to multilateral lenders and $1.29 billion to bilateral lenders.

Statistics:

  • Punjab's external debt stands at approximately $6.1 billion.
  • The province's debt stock has increased by 1.5% year-on-year to Rs 25 billion during the fiscal year 2024-25.
  • By the end of the current fiscal year, Punjab's overall debt is expected to hit Rs 1,710 billion, up from Rs 1,685 billion in June 2024.
  • External debt rose by Rs 26 billion over the year, while domestic debt decreased by Rs 0.41 billion, a drop of 22.5%.
  • The external debt portfolio is predominantly denominated in US dollars (68%), followed by Special Drawing Rights (SDRs) at 23%, Japanese yen at 5%, and other currencies making up 4%.
  • Sector-wise, agriculture, irrigation, and livestock received the largest share of debt-financed investments, accounting for 24% of total outstanding loans.

Sources:

  • Official budget documents of Punjab government
  • World Bank
  • Asian Development Bank (ADB)
  • Japan International Cooperation Agency (JICA)
  • International Fund for Agricultural Development (IFAD)

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