Pakistan’s total government debt climbed 7.7 percent in one year to Rs86.72 trillion by June 2026, bringing the country’s debt stock close to the Rs90 trillion mark, according to the Ministry of Finance.
The figure was reported in the Annual Debt Review Report for Fiscal Year 2025-26.
Despite the rise in the total amount owed, the debt-to-GDP ratio improved to 68.3 percent from 70.6 percent a year earlier, as the economy grew faster than the debt stock.
Domestic debt increased 9 percent to Rs59.44 trillion, while external debt rose 6.8 percent to $98.075 billion. In dollar terms, total government debt was around $312 billion.
At the same time, the government managed to reduce its interest bill by 22 percent to Rs6.948 trillion during FY2026.
The federal fiscal deficit also declined significantly to Rs4.763 trillion from Rs7.089 trillion in the previous year. The primary surplus increased to Rs2.185 trillion from Rs1.798 trillion.
Net federal revenue rose 6 percent to Rs10.52 trillion, while non-interest spending increased by only 2.3 percent.
The government financed around three-fourths of its fiscal deficit through domestic sources. Net domestic financing reached Rs3.586 trillion, compared with Rs1.177 trillion in external financing.
The government’s reliance on Treasury bills and Islamic financing also increased. Market Treasury Bills rose 25 percent to Rs10.928 trillion, while Sukuk and Bai-Muajjal financing jumped 35 percent to Rs8.559 trillion.
Commercial banks increased their share of government securities from 64 percent to 70 percent.
Pakistan also returned to international capital markets after a four-year gap. It issued a $750 million Eurobond in April 2026 and 1.75 billion yuan in Panda bonds in May.
The federal government accounted for 84 percent of external government debt by June 2026. Punjab owed $6.40 billion, Sindh $5.62 billion and Khyber Pakhtunkhwa $2.97 billion.
During the year, the government repaid Rs1.926 trillion owed to the State Bank of Pakistan and bought back Rs996 billion in market debt.
Government guarantees stood at Rs4.283 trillion at the end of June, with the power sector accounting for about 56 percent.
Under the Fiscal Responsibility and Debt Limitation Act, government debt stood at Rs77.168 trillion, equal to 60.8 percent of GDP.
