Public debt rises 76% to Rs86.7tr in four years

Pakistan’s total public debt increased 76% over four years to Rs86.7 trillion by the end of June 2026, while the government expects gross financing needs to reach Rs28.65 trillion during FY2026-27.

 

According to the Ministry of Finance’s Annual Borrowing Plan, public debt stood at Rs49.3 trillion in June 2022 and rose to Rs86.7 trillion by June 2026. The total included Rs59.4 trillion in domestic debt and Rs27.3 trillion in external debt.

 

The government plans to raise an additional Rs6.86 trillion during FY27, comprising Rs6.046 trillion through domestic borrowing and Rs813 billion through external financing. The federal fiscal deficit is projected at Rs7.02 trillion, while debt maturities will take total gross financing requirements to Rs28.647 trillion, equivalent to around 20% of GDP.

 

The borrowing strategy calls for reducing reliance on short-term Treasury Bills and shifting towards medium- and long-term debt instruments. The government plans Rs4.58 trillion in net issuance of Pakistan Investment Bonds (PIBs), with fixed-rate PIBs expected to account for more than half of new issuance.

 

Around Rs3.785 trillion is also planned through Ijara Sukuk and Bai Muajjal, supported by new hybrid and short-term Sukuk structures. Total gross Sukuk issuance is targeted at approximately Rs6.6 trillion during FY27.

 

The government will also continue liability-management operations, including debt buybacks and switches, depending on fiscal space and market conditions. Meanwhile, National Savings Schemes are being restructured through improved products, market-based pricing and digitalisation to encourage greater retail participation.

 

On the external financing side, the government expects $2.804 billion in net financing, including around $1.58 billion from multilateral lenders. It is also targeting more than $2 billion through international capital markets, including Eurobonds or international Sukuk, subject to favourable market conditions.

 

Pakistan raised $3 billion through Eurobonds last month, while foreign commercial bank financing will also be refinanced alongside potential new facilities.

 

The government also plans to facilitate non-resident investment through Naya Pakistan Certificates and government securities, with a target of Rs1.122 trillion.

 

The borrowing strategy places greater emphasis on fixed-rate domestic debt, while seeking to diversify the debt portfolio through Sukuk, retail instruments and longer-term bonds. The government also plans continued engagement with international credit rating agencies to support access to global capital markets.

 

Over the past decade, an average 81% of Pakistan’s fiscal deficit was financed domestically, while external sources accounted for the remaining 19%. In FY26, external financing covered 25% of the federal deficit, the highest share since FY20.