KARACHI: Pakistan’s central government debt stock rose by Rs5.7 trillion during the last fiscal year (FY26), driven by substantial borrowing from domestic and external sources.
The State Bank of Pakistan (SBP) reported on Tuesday that the country’s total debt stock, comprising domestic and external liabilities, increased by 7.4 percent, or Rs5.754 trillion, during FY26. The rise pushed the central government’s total debt stocks to Rs83.642 trillion level by the end of June 2026, compared with Rs77.888 trillion at the beginning of the fiscal year on July 1, 2025.
The increase reflects a continued rise in the government’s borrowing requirements during the year to finance the fiscal deficit. Borrowing from the both domestic and external debt contributed to the overall growth in the debt during FY26. Although both domestic and external debt stocks increased during the period under review, the rise was far more pronounced in domestic debt.
Domestic debt stock increased by 9 percent, or Rs4.969 trillion, during FY26, reaching Rs59.94 trillion by the end of June 2026. Meanwhile, external debt rose by 3 percent, or Rs471 billion, to Rs24.2 trillion during the same period.
Although, the federal board of revenue (FBR) has achieved its revised tax collection target of Rs13.0 trillion by the end of FY26, however the collection is still sufficient to meet the overall expenditures and it force the government to borrow more to finance the fiscal deficit.
According to SBP, the primary balance is estimated to have remained in surplus for the third consecutive year. While, the overall fiscal deficit was estimated to have turned out significantly lower than the previous year.
Going forward, fiscal consolidation is expected to continue in FY27, with the primary surplus targeted at 2.0 percent of GDP, whereas the overall fiscal deficit is targeted at 3.6 percent of GDP.
However, SBP said that, achieving these targets will require sustained progress in revenue mobilization and expenditure discipline amidst an uncertain domestic and global environment. In this regard, the monetary policy committee of the SBP has also re-emphasized the need of fiscal reforms, particularly tax base broadening efforts and curtailing PSE losses, to support high and sustainable economic growth.
Copyright Business Recorder, 2026
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