Pakistan Extends Average Debt Maturity to 3.8 Years, Aims for 4.2 Years by 2028

Pakistan has extended the average maturity of its public debt to 3.8 years as of June 2026, up from 2.7 years in June 2024, according to the Ministry of Finance. The government aims to increase the average maturity further to 4.2 years by June 2028 as part of efforts to reduce refinancing risks and spread repayment obligations over longer periods.

The improvement reflects a shift toward longer-term borrowing, diversified financing sources, and proactive debt management. However, the country still faces substantial repayment obligations, with domestic debt principal repayments estimated at Rs. 17 trillion in FY2027, excluding the rollover of Treasury Bills. External principal repayments are projected at another Rs. 4.531 trillion.

The country’s total public debt increased by Rs. 6.2 trillion to Rs. 86.7 trillion by June 2026. However, the pace of debt accumulation slowed, with the debt stock growing 7.7 percent during FY2026 compared with 12.9 percent in FY2025. Despite the increase in outstanding debt, the government’s gross financing needs are expected to remain around 20 percent of GDP. The Finance Ministry attributed this to fiscal consolidation and improved debt management, which have helped contain financing requirements.

Government interest expenditure declined 22 percent year over year during FY2026, generating savings of Rs. 1.939 trillion compared with the previous fiscal year. Lower interest payments, alongside continued fiscal consolidation, helped Pakistan record a primary surplus of Rs. 2.185 trillion. The federal fiscal deficit also narrowed to Rs. 4.763 trillion in FY2026 from Rs. 7.089 trillion in FY2025, reflecting an improvement in the government’s fiscal position.

The Finance Ministry also highlighted the role of exchange rate stability in limiting the impact of foreign currency valuation adjustments on public debt. In FY2022 and FY2023, depreciation of the Pakistani rupee against the US dollar significantly increased the rupee value of external debt, adding to the country’s overall debt burden.

The government expects continued fiscal discipline, longer maturity borrowing instruments, and diversification of financing sources to help manage upcoming repayments, reduce refinancing pressures, and contain further growth in public debt.