Pakistan’s federal government debt rose to Rs. 83.6 trillion by the end of June 2026, registering a 75% increase over four years despite a significant rise in government revenues, according to the latest debt bulletin issued by the State Bank of Pakistan (SBP).
The central government’s direct debt increased by Rs. 5.8 trillion, or 7.3%, during FY2025-26, compared with the previous year. The latest figure does not include IMF loans and certain other liabilities recorded on the SBP’s balance sheet.
The SBP is expected to release the complete public debt position separately.
Federal government debt stood at approximately Rs. 47.8 trillion in June 2022, meaning the debt burden has increased by around Rs. 35.8 trillion over the past four years.
Domestic Borrowing Drives Debt Increase
Domestic borrowing remained the primary contributor to the latest increase in government debt.
According to SBP data, domestic debt rose from Rs. 54.5 trillion in June 2025 to Rs. 59.5 trillion in June 2026, representing an increase of Rs. 5 trillion, or 9.1%.
External debt increased at a slower pace, rising from Rs. 23.4 trillion to Rs. 24.2 trillion, an increase of around Rs. 783 billion.
The relatively moderate rise in external debt in rupee terms was partly supported by the appreciation of the Pakistani rupee against major international currencies during the fiscal year.
Official government data shows that domestic borrowing has increasingly become the dominant component of Pakistan’s overall public debt.
Debt Increases Despite Higher Revenues
The rise in government debt has occurred alongside a substantial increase in federal revenues.
According to Ministry of Finance figures cited in the debt assessment, federal gross revenues increased by 107% over four years, while government expenditure rose by around 66%.
Higher tax collections, increased petroleum levies and additional taxation on salaried individuals, businesses and other sectors contributed to the growth in government revenues.
However, rising interest costs, fiscal deficits, social protection spending and other expenditures continued to create significant financing requirements.
Debt Servicing Adds Pressure
Debt servicing remains one of the major pressures on Pakistan’s federal budget.
Under the FY2026-27 budget, the government has allocated around Rs. 8.05 trillion for interest payments, including approximately Rs. 6.98 trillion for servicing domestic debt.
The government also faces substantial principal repayments. Budget documents have allocated around Rs. 25.99 trillion for public debt repayments during FY2026-27, highlighting the scale of the country’s refinancing requirements.
Debt Sustainability Remains a Challenge
Pakistan’s rising debt burden continues to limit fiscal space, with a significant portion of government resources being directed toward debt servicing instead of development and productivity-enhancing spending.
The Fiscal Responsibility and Debt Limitation Act requires the government to gradually reduce public debt relative to GDP, with the long-term objective of bringing the debt ratio down to 50% by FY2032-33.
However, the continued increase in nominal debt highlights the challenges involved in achieving the statutory target.
The Pakistan Economic Survey 2025-26 had reported total public debt of Rs. 83.3 trillion at the end of March 2026, compared with Rs. 80.5 trillion in June 2025.
The government has also continued liability-management measures, including debt buybacks, while domestic borrowing remains the dominant source of Pakistan’s public debt.
