Govt debt crosses Rs80trn mark by March-end

KARACHI: Pakistan’s central government debt crossed Rs 80 trillion mark by the end of March 2026 mainly driven by higher long-term domestic borrowing.

According to the latest data released by the State Bank of Pakistan (SBP) on Wednesday, the country’s total debt stock, comprising both domestic and external liabilities, increased by Rs 2.636 trillion during the first nine months (July-March) of this fiscal year (FY26). With this increase, the central government’s debt stocks reached record Rs 80.524 trillion level at the end of March 2026, compared to Rs 77.888 trillion recorded in June 2025.

The sharp rise reflects accelerated borrowing from domestic sources by the federal government to meet financing requirements. However, external debt showed a declining trend during the same period.

READ MORE: Jul-Feb govt debt surges Rs2trn to Rs79.88trn

On the domestic side, debt stock increased by 5.6 percent, or Rs 3.1 trillion, during July-March FY26. It stood at Rs 57.566 trillion at the end of March 2026, up from Rs 54.472 trillion in June 2025.

In contrast, external debt recorded a slight decline. External debt fell by Rs 458 billion during the first nine months of the fiscal year, decreasing from Rs 23.417 trillion in June 2025 to Rs 22.959 trillion by March 2026.

SBP in recent report also revealed that the government continued to retire the outstanding debt owed to SBP, however it increased borrowing from scheduled banks in during this fiscal year.

To benefit from the declining interest rates, and its strategy to lengthen the maturity profile, the government set auction targets below or close to maturities for Treasury Bills (T-bills) resulting in a net retirement in this category. At the same time, the government allocated higher targets for PIBs, the SBP said.

In line with its objective to reduce exposure to interest rate risk, the government mobilized bulk of financing from Pakistan Investment Bonds (PIBs) - Fixed, followed by PIBs – Floating (PFLs) Semi Annual Coupon.

According to Khurram Schahzad Advisor to Finance Minister Pakistan’s fiscal position continued to strengthen as fiscal deficit declined to just 0.7 percent of GDP in 9MFY26, the lowest level in Pakistan’s history, compared to 2.6 percent in same period of last fiscal year.

He said that revenues continue to improve, expenditures remain controlled, debt vulnerabilities are easing, and the external account remains resilient. First time in decades, both fiscal and external balances have improved simultaneously - strengthening macroeconomic stability, resilience, and investor confidence, he added.

Copyright Business Recorder, 2026