The federal government’s total debt stock increased by Rs641 billion during the first half of the current fiscal year (FY26), mainly due to a sharp rise in domestic borrowing, according to data released by the State Bank of Pakistan (SBP) on Wednesday.
SBP figures show that the overall federal government debt, including domestic and external liabilities, reached Rs78.529 trillion by the end of December 2025, compared to Rs77.888 trillion in June 2025. The increase was largely driven by domestic debt, which climbed by Rs891 billion, or 1.6 percent, during July–December FY26. Domestic debt rose from Rs54.472 trillion at the end of June to Rs55.363 trillion in December 2025.
In contrast, the stock of external debt declined during the same period. External liabilities fell by Rs251 billion, from Rs23.417 trillion in June 2025 to Rs23.166 trillion by the end of December. The decline reflects slower external inflows, compelling the government to rely more heavily on domestic financing to meet its fiscal requirements.
On a year-on-year basis, the federal government’s total debt stock surged by 9.6 percent, or Rs6.882 trillion, during calendar year 2025, rising from Rs71.641 trillion in December 2024 to Rs78.529 trillion in December 2025.
SBP Governor Jameel Ahmad said Pakistan has repaid around USD 6 billion in external debt since the start of FY26, with an additional USD 4.5 billion scheduled for repayment by June 2026. He added that due to policy support, Pakistan’s external debt level remains broadly unchanged from 2022 levels, indicating controlled external borrowing.
Analysts noted that the continued rise in domestic debt underscores the government’s growing reliance on local borrowing to finance its fiscal deficit amid ongoing economic adjustments. While SBP estimates suggest some improvement in the fiscal balance during the first half of FY26, achieving the annual primary surplus target remains a significant challenge.