Debt burden rises in absolute terms as Pakistan records a third consecutive primary surplus under the IMF programme.
ISLAMABAD: Pakistan’s total debt and liabilities rose by Rs5.2 trillion, or 5.5%, to Rs99.6 trillion during fiscal year 2025-26, with public debt accounting for about 87% of the total, according to the State Bank of Pakistan (SBP).
Despite the increase in the absolute debt stock, total debt and liabilities declined as a proportion of the economy. The ratio fell to 78.5% of GDP, down 4.2 percentage points from a year earlier.
The decline in the debt-to-GDP ratio reflects improved economic growth and fiscal performance, although Pakistan’s overall debt burden remains substantial.
Total debt reaches Rs97.9 trillion
Total debt, excluding liabilities, increased by Rs6.3 trillion during FY2025-26 to Rs97.9 trillion.
Borrowing from the International Monetary Fund (IMF) increased by 17% to Rs3.1 trillion during the year. Pakistan received $2.2 billion through two IMF loan tranches under its three-year Extended Fund Facility, in addition to around $450 million in climate financing.
The increased IMF borrowing came as Pakistan continued implementing its economic reform programme aimed at strengthening fiscal and external-sector stability.
Debt servicing costs decline
Pakistan spent nearly Rs12 trillion on servicing its debt and liabilities during FY2025-26.
However, debt servicing costs declined by Rs1.2 trillion, or 9%, compared with the previous year, mainly because of lower interest rates.
Interest payments fell significantly from Rs9.5 trillion to Rs7.3 trillion, providing some relief to the government’s fiscal position.
Meanwhile, principal repayments amounted to around Rs4.5 trillion and were financed through fresh borrowing.
The figures highlight the continued pressure that debt servicing places on government finances despite the reduction in interest costs.
Public debt rises to Rs86.7 trillion
Gross public debt increased by Rs6.2 trillion, or 7.7%, to Rs86.7 trillion during the fiscal year.
However, public debt as a share of GDP declined from 70.6% to 68.3%.
Pakistan also recorded its third consecutive primary budget surplus under the IMF programme. The surplus was supported by stronger tax revenues and tighter government spending.
Maintaining primary surpluses will remain important for containing the growth of public debt and improving fiscal sustainability.
External debt and liabilities increase
Pakistan’s external debt and liabilities increased by $3.3 billion to $138.6 billion during FY2025-26.
SBP Governor Jameel Ahmad said the central bank purchased $9 billion from the local foreign exchange market during the year.
The purchases contributed to strengthening Pakistan’s foreign exchange position and rebuilding its external buffers.