Government Allocates 46% Budget For Debt Servicing

ISLAMABAD: Pakistan is set to allocate a significant portion of its budget for the fiscal year 2025-26 towards debt servicing. Out of a total budget outlay of Rs 17.573 trillion, approximately Rs 8.206 trillion, or 46.7 percent, will be dedicated to covering interest payments and principal repayments on its debts.

This allocation for debt servicing in 2025-26 represents a decrease compared to the current fiscal year (2024-25), where the initial earmark was Rs 9.775 trillion, later revised to Rs 8.945 trillion.

A breakdown of the debt servicing shows that foreign debt servicing for 2025-26 is projected to be Rs 1.009 trillion. This is a slight reduction from the Rs 1.038 trillion allocated and subsequently revised for the current fiscal year.

The larger portion of debt servicing will go towards domestic debt, with an estimated Rs 7.197 trillion earmarked for 2025-26. This is less than the Rs 8.736 trillion initially allocated for 2024-25, which was later revised to Rs 7.906 trillion.

The country’s total public debt stood at Rs 76,007 billion at the end of March 2025. This indicates an increase of Rs 4,761 billion (6.7 percent) since June 30, 2024, when the total public debt was Rs 71,246 billion.