Pakistan government debt recorded a sharp weekly increase as the federal and provincial governments collectively acquired Rs466.7 billion in additional debt during the week ended December 12, 2025, according to the latest State Bank of Pakistan (SBP) weekly estimates. Despite this rise, the overall picture for the ongoing fiscal year 2026 (FY26) still reflects a net retirement of Rs149.06 billion, highlighting the government’s complex borrowing and repayment dynamics.
The SBP data offers critical insight into how Pakistan is financing its fiscal needs amid economic stabilization efforts, monetary tightening, and rising development expenditures.
Pakistan Government Debt Split Across Key Borrowing Categories
Pakistan government debt is officially categorized into three broad borrowing purposes:
- Budgetary Support
- Commodity Operations
- Others
During the reported week, borrowing activity was heavily skewed toward budgetary support, underscoring continued pressure on public finances.
Weekly Breakdown of Pakistan Government Debt
• Budgetary Support: Net borrowing of Rs467.63 billion
• Commodity Operations: Net retirement of Rs926 million
• Others: Net retirement of Rs3 million
This breakdown clearly shows that while short-term liabilities declined in commodity-related operations, the government relied extensively on borrowing to meet budgetary requirements.
Cumulative Pakistan Government Debt Position in FY2026
On a cumulative basis for FY2026, Pakistan government debt trends reveal a mixed fiscal outcome:
• Budgetary Support: Net retirement of Rs166.91 billion
• Commodity Operations: Net borrowing of Rs19.21 billion
• Others: Net retirement of Rs1.36 billion
These figures suggest that while the government has managed to reduce some debt obligations over the fiscal year, recurring weekly borrowings continue to offset broader repayment gains.
State Bank of Pakistan’s Role in Pakistan Government Debt
The State Bank of Pakistan (SBP) remains one of the largest sources of budgetary financing. Since the start of FY2026:
• The government has retired a net Rs755.19 billion to the SBP
• Federal Government: Retired Rs994.63 billion
• Provincial Governments: Borrowed Rs276.23 billion
• AJK Government: Retired Rs19.06 billion
• Gilgit-Baltistan Government: Retired Rs17.72 billion
This indicates a strong effort by the federal government to reduce reliance on central bank financing, aligning with monetary discipline goals.
Scheduled Banks and Pakistan Government Debt Exposure
In contrast to SBP repayments, Pakistan government debt exposure to scheduled banks increased significantly:
• Net borrowing from scheduled banks: Rs588.28 billion
• Federal Government: Borrowed Rs671.69 billion
• Provincial Governments: Retired Rs83.41 billion
This shift highlights a strategic transition from central bank borrowing to commercial banking channels, which can influence liquidity conditions, interest rates, and private sector credit availability.
What Rising Pakistan Government Debt Means for the Economy
While net retirement for FY2026 reflects fiscal restraint, the large weekly spikes in Pakistan government debt raise important concerns:
• Increased reliance on banks may crowd out private sector lending
• Higher borrowing costs could pressure future budgets
• Fiscal sustainability remains sensitive to revenue performance and external financing
Market analysts and policymakers will closely monitor upcoming SBP data to assess whether weekly borrowing trends stabilize in the second half of the fiscal year.
Pakistan government debt continues to follow a volatile but strategically managed path in FY2026. While the government has achieved net debt retirement over the fiscal year, short-term borrowing pressures particularly for budgetary support remain significant. The evolving balance between SBP repayments and scheduled bank borrowings will be a key indicator of Pakistan’s fiscal and monetary stability moving forward.