Pakistan’s central government debt climbed to approximately Rs83.4 trillion in July 2026, highlighting the continued pressure on the country’s finances as the government relies on borrowing to meet its financing requirements.
According to data attributed to the State Bank of Pakistan (SBP), the government’s debt increased from around Rs78.2 trillion in July 2025, representing a rise of about 6.6% over the year.
The increase comes after the central government’s debt reached Rs83.6 trillion at the end of June 2026, according to SBP data. The June figure represented a 7.4% increase during the 2025-26 fiscal year.
Domestic borrowing remains the major component of the government’s debt. At the end of June, domestic debt stood at about Rs59.4 trillion, while external debt was approximately Rs24.2 trillion. Domestic debt increased more rapidly than external obligations during the fiscal year.
Economists have pointed to financing needs and rising debt-servicing costs as major factors behind the growing debt burden. A substantial share of government expenditure is allocated to interest payments, leaving less fiscal space for development projects and other productive spending.
Despite the increase in the debt stock, analysts noted that Pakistan’s debt-to-GDP ratio declined to around 66% in FY2025-26, compared with 68% a year earlier, partly reflecting fiscal consolidation and economic growth.
The rising debt nevertheless remains a significant challenge for policymakers. Managing borrowing costs, extending debt maturities and strengthening revenues will be crucial for improving Pakistan’s fiscal position and reducing pressure on future budgets.
The latest figures underline the need for sustainable economic reforms to ensure that borrowing supports productive growth rather than creating a heavier financial burden for future generations.
