Public debt rose 7.7 percent to Rs86.715 trillion, while a primary surplus, lower interest costs and debt management measures helped improve key debt indicators.
ISLAMABAD: Pakistan’s public debt grew by 7.7 percent to Rs86.715 trillion ($312 billion) by the end of June 2026, marking one of the slowest growth rates in the past 20 years, the Ministry of Finance said on Wednesday.
Public debt had increased by 13 percent in FY2025. The slower growth reduced the public debt-to-GDP ratio to 68.3 percent from 70.6 percent a year earlier.
Under the Fiscal Responsibility and Debt Limitation Act (FRDLA) definition, public debt stood at Rs77.168 trillion, or 60.8 percent of GDP, compared with 64.2 percent at the end of June 2025.
The ministry attributed the improvement to a federal primary surplus of Rs2.185 trillion and a 22 percent year-on-year reduction in interest costs. Strategic domestic debt management and liability management operations, including debt buybacks worth Rs2.924 trillion during FY2026, also contributed to lower financing costs.
Market Treasury Bills increased 25 percent to Rs10.928 trillion as investors favoured shorter maturities following the Iran war. However, the share of floating-rate Pakistan Investment Bonds (PIBs) declined to 37.2 percent of the portfolio from 43 percent in FY2025.
The share of fixed-rate instruments rose to 26.6 percent, increasing the average time to refixing to 1.3 years and helping mitigate refinancing risks.
The government also expanded Shariah-compliant financing. Government Ijarah Sukuk and Bai-Muajjal outstanding increased 35 percent to Rs8.559 trillion, accounting for 15.6 percent of the government securities portfolio, compared with 12.7 percent in June 2025.
The maturity profile remained manageable, with average time to maturity at 3.82 years for domestic debt and 6.1 years for external debt.
External debt composition also improved, with medium- and long-term obligations rising to 84 percent of the portfolio from 76 percent, while the short-term share fell to 16 percent from 24 percent.
Pakistan returned to international capital markets after a four-year gap, issuing a $750 million Eurobond in April 2026 and a 1.75 billion Chinese yuan Panda bond in May.
Meanwhile, total government-guaranteed debt stood at Rs4.283 trillion, comprising Rs2.238 trillion in domestic guarantees and Rs2.045 trillion in external guarantees.