Pakistan Debt Rises by Rs2 Trillion

Pakistan’s central government debt has recorded a substantial increase of nearly Rs2 trillion during the first eight months of FY2026, primarily driven by elevated domestic borrowing, as per data issued by the State Bank of Pakistan.

Aggregate public debt, encompassing both domestic and external liabilities, reached Rs79.882 trillion by the end of February 2026, reflecting an increase of Rs1.994 trillion (2.5%) from Rs77.888 trillion reported at the close of June 2025.

The escalation in debt levels is largely attributable to increased reliance on the domestic banking system to meet fiscal financing requirements, amid insufficient revenue growth to fully offset government expenditures.

Domestic debt registered a 4% increase over the July–February period, rising by Rs2.207 trillion to Rs56.679 trillion. Within this category, long-term debt expanded by Rs1.828 trillion to Rs47.481 trillion, while short-term debt rose by Rs376 billion to Rs9.132 trillion.

Conversely, external debt demonstrated a contraction of Rs214 billion, declining to Rs23.203 trillion by the end of February, compared to Rs23.417 trillion at the commencement of the fiscal year.

Fiscal indicators reflected an overall surplus during the current fiscal period, with the primary balance remaining broadly consistent with the previous year, supported by prudent expenditure management and reduced interest obligations.

Tax revenue collection increased by 10.6% during the period under review; however, it remained below the trajectory required to achieve the annual target.

The State Bank of Pakistan underscored the necessity of sustained fiscal consolidation through broadening of the tax base and implementation of structural reforms to ensure long-term economic stability.

Additionally, the central bank indicated that it had reduced the cash reserve requirement to inject liquidity into the banking system, thereby facilitating increased lending capacity to the private sector.