Pakistan’s total debt and liabilities climbed to nearly Rs100 trillion by the end of June 2026, highlighting the country’s continued dependence on borrowing despite some improvement in the debt-to-GDP ratio and lower debt servicing costs.
Debt Stock Rises To Rs99.6 Trillion
According to the latest State Bank of Pakistan debt bulletin, total debt and liabilities increased to Rs99.6 trillion during FY2025-26, up Rs5.2 trillion, or 5.5 percent, from the previous year.
Public debt accounted for around 87 percent of the total.
Despite the increase in the absolute debt stock, total debt and liabilities declined to 78.5 percent of GDP, improving by 4.2 percentage points compared with the previous year.
Total debt excluding liabilities reached Rs97.9 trillion, representing an annual increase of Rs6.3 trillion.
IMF-Related Debt Increases
Pakistan’s IMF-related debt rose 17 percent to Rs3.1 trillion during the year. The increase followed the receipt of two tranches worth $2.2 billion under the Extended Fund Facility and another $450 million in climate financing.
The figures highlight the continued importance of multilateral financing in supporting Pakistan’s external and fiscal requirements.
Debt Servicing Costs Decline
Pakistan spent approximately Rs12 trillion on servicing its debt and liabilities during FY2025-26, equivalent to around $43 billion.
Although the amount remained substantial, it was Rs1.2 trillion, or 9 percent, lower than the previous year. The decline was largely attributed to lower interest rates.
Interest expenses fell from Rs9.5 trillion to Rs7.3 trillion, representing a reduction of nearly one-fourth.
Principal repayments, however, increased 29 percent to Rs4.5 trillion. Much of these repayments were financed through fresh borrowing.
Gross Public Debt Reaches Rs86.7 Trillion
Gross public debt, which represents the federal government’s responsibility, increased to Rs86.7 trillion.
The stock rose by Rs6.2 trillion, or 7.7 percent, during the year. However, as a proportion of GDP, public debt declined from 70.6 percent to 68.3 percent.
The improvement in the debt-to-GDP ratio reflects the impact of economic growth and fiscal consolidation, even as the overall debt stock continued to rise.
Primary Surplus Provides Some Relief
Pakistan recorded its third consecutive primary budget surplus under the IMF programme.
The primary surplus excludes interest payments and was supported mainly by stronger tax collection and reductions in some subsidies.
Officials noted that without the primary surplus, the country’s total debt stock would have crossed the Rs100 trillion mark and the debt-to-GDP ratio would have been higher.
External Debt And Liabilities Reach $138.6 Billion
In dollar terms, Pakistan’s external debt and liabilities increased to $138.6 billion by the end of FY2025-26, up $3.3 billion from the previous year.
External debt growth remained slower than in earlier periods because of limited availability of foreign credit and the State Bank’s purchases of foreign currency from the domestic market.
SBP Governor Jameel Ahmad said the central bank had cumulatively purchased $28 billion from the domestic market, including $9 billion during FY2025-26.
Transparency Concerns Remain
Despite the improvement in some fiscal indicators, concerns remain over the transparency of Pakistan’s overall debt obligations.
A separate US State Department report on budget transparency observed that information on some government debt obligations, including significant liabilities of state-owned enterprises, remained limited.
The report also raised concerns about the level of parliamentary and civilian oversight of military and intelligence budgets.
It recommended timely publication of the executive budget proposal and greater disclosure of government debt and state-owned enterprise liabilities.
Interest Payments Remain A Major Fiscal Burden
Debt servicing continues to consume a significant portion of Pakistan’s fiscal resources.
Interest payments alone are projected to reach around Rs8 trillion during the current fiscal year, underscoring the pressure debt servicing places on government spending.
While the decline in the debt-to-GDP ratio and lower interest expenses provide some relief, the continued rise in the absolute debt stock remains a major challenge for Pakistan’s fiscal position.