KARACHI: Pakistan’s central government debt declined sharply by Rs936.6 billion during the first quarter (July-September) of this fiscal year (FY27), mainly due to a reduction in domestic borrowing, despite an increase in external debt.
According to State Bank of Pakistan (SBP), with a decline of 1.12 percent, the central government’s total debt stood at Rs82.658 trillion at the end of September 2026, compared to Rs83.595 trillion at the end of June 2026.
However, on a year-on-year basis, central government debt surged by 7.9 percent or Rs6trillion from Rs76.608 trillion in September 2025 to reach Rs 82.66 trillion in September 2026.
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In contrast, central government external debt increased by Rs699.6 billion, or 2.89 percent, mainly due to foreign inflows. Central government external debt reached Rs24.900 trillion in September 2026 compared to Rs24.201 trillion at the end of June 2026.
The government’s external debt figures exclude IMF loans and foreign exchange liabilities.
Analysts said that the decline in total government debt during the first quarter was entirely attributable to a reduction in domestic debt, which more than offset the increase in external debt.
However, the SBP, in recent monetary policy has warned that intensification in the Middle East conflict has made fiscal management more challenging. In this context, the SBP has emphasized that sustained and concerted efforts will be required to further strengthen fiscal discipline, enhance revenue mobilization through broadening of tax base, and accelerate the implementation of structural reforms.
The SBP has also reiterated that prudent fiscal management remains imperative to sustain macroeconomic stability.
The detailed analysis showed that central government domestic debt fell by Rs1.636 trillion, or 2.75 percent, during the first quarter of FY27. Domestic debt declined to Rs57.758 trillion at the end of September 2026 from Rs59.394 trillion in June 2026.
The reduction in domestic debt was primarily driven by a decline in short-term borrowing and permanent debt. The government’s long-term domestic debt decreased by Rs484.1 billion to Rs47.915 trillion in September 2026. While, with a decline of Rs578.1 billion, permanent debt stood at Rs44.144 trillion down from Rs44.722 trillion.
Copyright Business Recorder, 2026
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