KARACHI: Pakistan’s central government debt continued upward trajectory, rising by nearly Rs2 trillion during the first eight months of the current fiscal year (FY26), primarily driven by a sharp increase in domestic borrowing.
The State Bank of Pakistan (SBP) on Thursday reported that the country’s total debt stocks including both domestic and external debt liabilities, surged to Rs79.882 trillion by the end of February 2026. This represents an increase of Rs1.994 trillion, or 2.5 percent, in the overall debt, compared with Rs77.888 trillion at the end of June 2025.
Analysts said external debt has not increased during the period, however, a sharp rise has witnessed in the domestic debt as government borrowed more from the domestic banking system to bridge the financing gap. Overall, revenue collection has improved during the current fiscal year, however it remains insufficient to fully meet government expenditures.
READ MORE: Total debt crosses Rs 81.4trn mark
On the domestic front, debt stocks increased by 4 percent, or Rs 2.207 trillion, during July-Feb of FY26. Domestic debt reached Rs 56.679 trillion by the end of February 2026, compared with Rs54.472 trillion end of June 2025.
Out of total domestic debt, major surge was recorded in the long-termdebt, which increased from Rs 45.653 trillion in June 2025 to Rs 47.481 trillion end of Feb 2026, showing an increase of Rs 1.828 trillion. While, domestic short-term debt surged by Rs 376 billion to reach Rs 9.132 trillion end of February 2026.
In contrast, external debt recorded a slight decline. The country’s external debt stocks fell by Rs 214 billion to Rs23.203 trillion by the end of February 2026, down from Rs23.417 trillion end of June 2025.
The overall fiscal balance has recorded a surplus during the current fiscal year, while the primary surplus has remained close to last year’s level, supported by contained expenditures, particularly due to lower interest payments. However, the tax collection remained moderate, rising 10.6 percent during July-February FY26, well below the pace required to meet the annual target.
The SBP has underscored the need to sustain fiscal consolidation through tax base-broadening measures and structural reforms to support macroeconomic stability and long-term growth.In addition, the SBP has recently lowered the cash reserve requirement (CRR) to inject liquidity into the banking system and create greater space for private sector lending.
Copyright Business Recorder, 2026
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