Pakistan’s total federal government debt rose by Rs641 billion in the first six months of FY26 (July to December 2025), reaching Rs78.529 trillion by end-December, per State Bank of Pakistan figures. The increase stemmed mainly from a surge in domestic liabilities, offsetting a reduction in external debt.
Breakdown of Debt Movements
Domestic debt expanded by Rs891 billion (1.6%), climbing to Rs55.363 trillion from Rs54.472 trillion in June 2025. This uptick reflects greater borrowing from local banks and markets to meet financing gaps.
External debt, however, fell by Rs251 billion to Rs23.166 trillion, aided by repayments totaling around USD6 billion so far in the fiscal year. SBP Governor Jameel Ahmad highlighted that further repayments of USD4.5 billion are planned by June 2026, maintaining external debt at 2022 levels through targeted policies.
Broader Economic Implications
Year-on-year, debt grew 9.6% (Rs6.882 trillion) from December 2024 levels. The pattern indicates continued fiscal pressures and reliance on domestic sources, despite signs of improved fiscal balance in the half-year, including contained spending.
Experts note the government’s efforts to prioritize external debt management and achieve primary surpluses, though full-year targets face hurdles. The data signals ongoing challenges in balancing borrowing needs with debt sustainability in Pakistan’s evolving economic landscape.