ISLAMABAD: Pakistan’s total public debt increased 7.7% to around Rs86.72 trillion by the end of June 2026, compared with 13% growth a year earlier, according to the Annual Debt Review FY2026.
The Ministry of Finance’s Debt Management Office (DMO) said the public debt-to-GDP ratio declined to 68.3% from 70.6% a year earlier, supported by fiscal consolidation, a federal primary surplus and lower interest expenditure.
Domestic debt increased 9% during FY2026 to Rs59.441 trillion, while external debt rose 6.8% to $98.075 billion. In dollar terms, total public debt stood at around $312 billion.
Interest expenditure fell 22% to Rs6.948 trillion during FY2026 from Rs8.887 trillion in the previous fiscal year. The federal fiscal deficit also narrowed to Rs4.763 trillion from Rs7.089 trillion, while the primary surplus increased to Rs2.185 trillion.
The report showed that the government financed 75% of the federal fiscal deficit through domestic borrowing and 25% through external sources. Net domestic financing stood at Rs3.586 trillion, while net external financing reached Rs1.177 trillion.
Under the Fiscal Responsibility and Debt Limitation Act, total government debt stood at Rs77.168 trillion, equivalent to 60.8% of GDP, down from 64.2% at the end of June 2025.
The domestic debt portfolio also recorded significant changes. Market Treasury Bills increased 25% to Rs10.928 trillion, while Sukuk and Bai-Muajjal financing rose 35% to Rs8.559 trillion.
Commercial banks remained the largest holders of government securities, with their share increasing to 70% of domestic debt from 64% a year earlier.
Pakistan also returned to international capital markets during FY2026 after a four-year gap, issuing a $750 million Eurobond in April and a CNY1.75 billion Panda bond in May.
External public debt reached $98.075 billion by June 2026, with multilateral creditors accounting for 45.5% and bilateral creditors for 28%. Commercial borrowing sources represented around 13% of external debt, while the IMF accounted for 11%.
The government also retired Rs1.926 trillion of State Bank debt and conducted debt buybacks worth Rs996 billion during FY2026.
