Govt estimates Rs28.65tr financing needs for FY27

Pakistan’s federal government has estimated gross financing requirements of Rs28.647 trillion for FY2026-27, equivalent to around 20% of GDP, with most of the Rs7.02 trillion fiscal deficit expected to be financed through domestic borrowing.

 

According to the Annual Borrowing Plan for FY27 prepared by the Debt Management Office, the government has assumed an average exchange rate of Rs290 per US dollar for the fiscal year.

 

The plan targets Rs6.046 trillion in net domestic borrowing, compared with Rs813 billion in net external financing, while another Rs161 billion is expected from privatisation proceeds.

 

The government also plans to shift borrowing towards medium- and long-term instruments, reducing dependence on short-term Treasury Bills to lower refinancing risks and extend the maturity profile of public debt.

 

The plan includes Rs4.58 trillion in net issuance of Pakistan Investment Bonds (PIBs), with fixed-rate PIBs expected to account for more than half of new issuances. Around Rs3.785 trillion is also planned through Government Ijara Sukuk, Bai Muajjal and short-term Sukuk.

 

Gross Sukuk issuance is projected at approximately Rs6.6 trillion during FY27, including new hybrid and short-term Sukuk with three- and six-month maturities. The government is also considering a 20-year fixed-coupon bond and plans to replace the existing 10-year zero-coupon floating-rate instrument with a 10-year fixed-rate bond.

 

The financing requirements include Rs21.627 trillion in debt maturities during FY27, comprising Rs17.096 trillion in domestic maturities and Rs4.531 trillion in external repayments. Combined with the fiscal deficit, these obligations bring total gross financing needs to Rs28.647 trillion.

 

On the external side, the government expects $2.804 billion in net external financing, including $1.58 billion in net multilateral inflows. It also plans to raise around $2 billion through international bonds, subject to favourable market conditions.

 

Total external inflows are estimated at $13.378 billion, against outflows of $10.574 billion. The government will also seek to refinance existing foreign commercial loans and explore financing options offering more favourable pricing and terms.

 

Pakistan’s public debt stood at Rs86.7 trillion at the end of June 2026, including Rs59.4 trillion in domestic debt and Rs27.3 trillion in external debt.

 

The Debt Management Office said the average maturity of the government’s debt portfolio had increased from 2.7 years in June 2024 to 3.8 years in June 2026, with a target of 4.2 years by FY28. Interest expenditure also declined by 22% during FY26.

 

The government will continue debt-management operations, including buybacks and switches. Transactions worth around Rs4.7 trillion have been carried out since September 2024.

 

The borrowing plan also calls for restructuring the Central Directorate of National Savings through improved products, market-based pricing and digitalisation, while encouraging greater retail participation in government securities.