KARACHI: The federal government’s total debt stocks rose by Rs641 billion during the first half of this fiscal year (FY26), mainly due to a rise in domestic borrowing, the State Bank of Pakistan (SBP) reported on Wednesday.
According to SBP, the overall federal government debt stocks (including domestic and external) stood at Rs78.529 trillion at the end of December 2025, up from Rs77.888 trillion in June 2025.
The increase was mainly driven by growth in domestic debt, which rose by Rs 891 billion, or 1.6 percent, during July-December FY26. Domestic debt climbed from Rs 54.472 trillion at the end of June to Rs 55.363 trillion in December 2025. In contrast, external debt declined during the same period.
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The stock of external debt fell by Rs251 billion, from Rs23.417 trillion in June 2025 to Rs23.166 trillion by the end of December 2025. Slower external inflows have forced the government to rely more heavily on domestic resources to meet its financing requirements.
On a year-on-year basis, the federal government’s total debt stock increased by 9.6 percent or Rs6.882 trillion during calendar year 2025, rising from Rs71.641 trillion in December 2024 to Rs78.529 trillion in December 2025.
According to State Bank of Pakistan Governor Jameel Ahmad, the country has repaid about USD6 billion in external debt since the start of the current fiscal year. A further USD4.5 billion is scheduled to be repaid in the remaining months of FY26, up to June 2026.
He said that with the support of policy measures Pakistan’s external debt is not increasing and still stood at the level of 2022.
Analysts said that higher domestic debt indicates greater reliance on local borrowing to meet financing needs.
The latest figures underline the government’s continued dependence on domestic sources to finance its fiscal deficit, even as it manages external obligations amid ongoing economic adjustments.
According to SBP estimates from the financing side suggest an improvement in the fiscal balance during first half of FY26, indicating relatively contained expenditures. However, achieving the annual primary surplus target seems challenging.
Copyright Business Recorder, 2026
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