Permanent Debt

Permanent debt is the category used by the State Bank of Pakistan (SBP) and Pakistan's Ministry of Finance for the long-term, mostly marketable part of the federal government's domestic debt. It consists mainly of Pakistan Investment Bonds (PIBs) and Government of Pakistan Ijara sukuk, together with prize bonds and a few smaller items. It is the largest of the three domestic debt categories, ahead of floating debt and unfunded debt.

Despite the name, permanent debt is not perpetual. Each bond has a fixed repayment date; the word marks the contrast with short-term floating borrowing that must be renewed every few months. In Pakistan's usage it simply means debt with an original maturity of more than one year, plus instruments the authorities choose to classify alongside it.

Imagine a family that needs money for a house. It can take a short loan that must be renewed with the lender every three months, or a long loan repaid over ten years. The long loan costs more in interest, but the family does not have to worry each quarter about whether the lender will roll it over.

Permanent debt is the government's long loan. By selling bonds that run for three, five, ten or more years, the government locks in its funding for a long period and reduces the risk of having to borrow a large amount at once when interest rates are high. Floating debt is the short loan it renews again and again.

SBP's central government debt table lists the following under permanent debt. Figures are provisional and in Pakistani rupees as of end-August 2026:

• Pakistan Investment Bonds. About Rs 34.3 trillion, by far the largest item. PIBs are sold at auction in fixed-rate, floating-rate and zero-coupon forms, and pay interest set by a coupon rate or a benchmark.
• Government of Pakistan Ijara sukuk. About Rs 8.8 trillion, issued under ijarah lease structures for investors and banks that follow Islamic finance principles. SBP's table includes both long-term sukuk and one-year sukuk under this heading.
• Bai-Muajjal of sukuk. About Rs 0.7 trillion, a deferred-payment sale arrangement used to raise funds from Islamic banks.
• Prize bonds. About Rs 0.44 trillion, including registered Premium Prize Bonds. Prize bonds pay no interest; holders instead enter regular draws for cash prizes.
• SBP's on-lending to the government against the IMF's allocation of Special Drawing Rights. About Rs 0.48 trillion, a fixed amount since November 2021.
• Market loans. A residual of a few billion rupees from older federal loan issues.

Total permanent debt was about Rs 44.7 trillion, roughly three quarters of central government domestic debt.

PIBs and Ijara sukuk are sold through auctions run by SBP on behalf of the Ministry of Finance. Bids come mainly through primary dealers, which are banks appointed to take part in auctions and to make a secondary market in government securities. Commercial banks hold most of the stock, because government paper carries no credit-risk charge in their regulatory capital calculations and can be used as collateral in repo transactions with SBP and other banks.

Smaller amounts are held by insurers, mutual funds, pension funds, corporates and individuals. Non-residents can buy PIBs, but such holdings are counted as external debt under the residency rule. Prize bonds are sold over the counter at SBP offices, National Savings centres and bank branches.

The balance between long-term and short-term borrowing is a central question in debt management. A larger share of permanent debt lengthens the average time to maturity and reduces refinancing risk, the danger that a large volume of bills falls due when markets are stressed or rates are high. Pakistan's medium-term debt strategies have repeatedly set the goal of shifting borrowing from Market Treasury Bills towards PIBs and sukuk for this reason.

Long-term borrowing has costs of its own. Investors usually demand a higher yield for tying money up for longer, as shown by an upward-sloping yield curve, and fixed-rate bonds lock the government into rates that may later look expensive. Floating-rate PIBs, whose payments reset with Treasury bill yields, reduce refinancing risk but leave the interest bill exposed to the policy rate set through monetary policy.

Permanent debt is one part of Pakistan's public debt. The government also owes floating debt, unfunded debt raised through National Savings Schemes, and a large stock of external debt. Analysts look at all of these together, alongside the size of the economy measured by GDP, to judge whether the burden of government borrowing is sustainable. The general mechanics of long-term government securities are described under Treasury bonds and bonds.

• State Bank of Pakistan: Central Government Debt
• Ministry of Finance, Government of Pakistan