Pakistan’s public and publicly guaranteed (PPG) debt rose sharply over the past fiscal year, climbing Rs6.21 trillion to reach Rs90.98 trillion by the end of June 2026, up from Rs84.77 trillion a year earlier, according to figures shared by a senior Finance Ministry official with The News.
The official said the country’s total debt stock grew 7.3 percent over the one-year period, with the bulk of the increase — Rs6.2 trillion — coming in the shape of public debt and the remainder, Rs0.01 trillion, in publicly guaranteed debt.
Notably, the rise in absolute terms was accompanied by an improvement in the debt-to-GDP ratio. The PPG debt-to-GDP ratio fell 2.6 percentage points, from 74.3 percent in June 2025 to 71.7 percent by the end of June 2026.
Domestic Debt Drives the Surge
The increase was driven overwhelmingly by domestic borrowing, which jumped Rs4.93 trillion over the year — from Rs56.7 trillion to Rs61.65 trillion. The official attributed the surge to changes in interest rates, given the higher share of floating-rate debt in the government’s portfolio.
As of end-June 2026, fixed-rate instruments made up just 27 percent of government securities. The maturity profile of domestic debt comprised 20 percent short-term and 80 percent long-term paper, with an average time to maturity of about 3.8 years and an average time to re-fixing of 1.4 years.
“This indicates the average portfolio is exposed to interest rate pricing risks,” the official said.
External debt, meanwhile, rose Rs1.29 trillion, from Rs28.06 trillion in June 2025 to Rs29.35 trillion in June 2026. Roughly 60 percent of external debt is on fixed rates and 40 percent on floating rates, with a maturity profile of 10 percent short-term and 90 percent long-term and an average time to maturity of over six years.
Total outstanding guarantees stood at Rs4.28 trillion — comprising Rs2.23 trillion in domestic guarantees and Rs2.24 trillion in external guarantees.
Interest Bill Shrinks
Total public debt stood at Rs86.7 trillion as of June 2026, up Rs6.2 trillion or 7.7 percent from Rs80.5 trillion at the end of June 2025. Despite that increase, the public debt-to-GDP ratio declined from 70.6 percent to 68.3 percent.
The official attributed the improvement to growth in nominal GDP, a federal primary surplus of Rs2.18 trillion, and debt buybacks.
In a significant relief to the exchequer, interest payments fell by Rs1.94 trillion — a decline of 21.7 percent — dropping from Rs8.88 trillion in FY25 to Rs6.95 trillion in FY26.
The figures suggest a mixed picture for the country’s debt dynamics: while the overall debt burden continues to grow in absolute terms, a combination of GDP growth, fiscal consolidation and lower interest costs is easing the pressure relative to the size of the economy.
