Pakistan's Public Debt Surges by Rs. 6.2 Trillion to Nearly Rs. 91 Trillion

Pakistan's total public and publicly guaranteed debt increased by Rs. 6.21 trillion over the past year, reaching Rs. 90.98 trillion by the end of June 2026, up from Rs. 84.77 trillion in June 2025. The 7.3% rise was confirmed by a senior Finance Ministry official, who noted that despite the absolute increase, the debt-to-GDP ratio fell by 2.6 percentage points from 74.3% to 71.7%.

The decline in the debt ratio was driven by faster nominal economic growth, a federal primary surplus of Rs. 2.18 trillion, and debt buyback operations, according to the official. Total public debt excluding guarantees stood at Rs. 86.7 trillion, up 7.7% from Rs. 80.5 trillion, but its ratio to GDP also dropped from 70.6% to 68.3%.

Domestic debt rose by Rs. 4.93 trillion, from Rs. 56.7 trillion to Rs. 61.65 trillion, largely due to changes in interest rates. The official explained that a significant portion of domestic debt carries floating rates, with only 27% of government securities on fixed rates. The average time to maturity of domestic debt is about 3.8 years, but its average time to re-fixing is just 1.4 years, leaving it exposed to interest rate fluctuations.

External debt grew by Rs. 1.29 trillion, from Rs. 28.06 trillion to Rs. 29.35 trillion. About 60% of external debt is on fixed rates, 90% is long-term, and its average time to maturity exceeds six years, providing greater stability compared to domestic debt.

Interest payments fell by Rs. 1.94 trillion, or 21.7%, from Rs. 8.88 trillion in FY25 to Rs. 6.95 trillion in FY26, offering some relief to the fiscal account. Outstanding government guarantees totaled Rs. 4.28 trillion, including Rs. 2.23 trillion domestic and Rs. 2.24 trillion external.

The Finance Ministry has previously shared a detailed breakdown of Pakistan's external debt. The latest figures underscore the delicate balance between rising debt obligations and improving macroeconomic indicators, as the government continues to manage fiscal risks amid a complex economic environment.