ISLAMABAD, November 4, 2026: Pakistan’s public and publicly guaranteed debt increased by Rs6.21 trillion during the financial year ending June 2026, reaching Rs90.98 trillion compared with Rs84.77 trillion a year earlier, according to figures reported by a senior Finance Ministry official.
The increase of approximately 7.3% came despite a decline in the country’s debt-to-GDP ratio, reflecting growth in the nominal size of the economy.
Public and publicly guaranteed debt represented 71.7% of gross domestic product at the end of June 2026, down from 74.3% in June 2025.
Domestic Borrowing Accounts for Most of the Increase
Domestic debt rose by Rs4.93 trillion over the year, increasing from Rs56.7 trillion to Rs61.65 trillion.
The Finance Ministry official attributed part of the increase to interest-rate movements and the significant proportion of domestic borrowing linked to floating interest rates.
At the end of June 2026, fixed-rate instruments accounted for approximately 27% of government securities. The average maturity of domestic debt was around 3.8 years, while its average period before interest rates could be reset was approximately 1.4 years.
This shorter interest-rate adjustment period leaves a substantial portion of government borrowing exposed to changes in financing costs.
External debt increased by Rs1.29 trillion, rising from Rs28.06 trillion to Rs29.35 trillion during the same period.
Approximately 60% of external debt carried fixed interest rates, while 90% had long-term maturities. Its average maturity exceeded six years.
Public Debt Excluding Guarantees Reaches Rs86.7 Trillion
Pakistan’s public debt, excluding government guarantees, stood at Rs86.7 trillion at the end of June 2026, compared with Rs80.5 trillion a year earlier.
Although the outstanding amount increased by approximately 7.7%, its ratio to GDP declined from 70.6% to 68.3%.
The Finance Ministry official linked the improvement in the ratio to nominal economic growth, a federal primary surplus of Rs2.18 trillion and government debt buybacks.
Outstanding government guarantees totalled approximately Rs4.28 trillion at the end of the financial year.
Interest Payments Decline
Despite the rise in outstanding debt, the government’s interest payments fell during FY2025–26.
Interest expenditure declined from Rs8.88 trillion in the previous financial year to Rs6.95 trillion, a reduction of approximately Rs1.94 trillion, or 21.7%.
The figures highlight two different aspects of Pakistan’s debt position: the total amount owed continued to increase, while debt ratios and annual interest expenditure declined.
The composition and maturity of government borrowing remain important factors in determining how future changes in interest rates could affect public finances.