ISLAMABAD: The government’s fiscal discipline and debt management have significantly improved Pakistan’s debt profile, bringing the debt-to-GDP ratio down from 75.2 percent in fiscal year 2022-23 to an estimated 68.5 percent in fiscal year 2025-26.
The government had achieved primary fiscal surpluses for three consecutive years from fiscal year 2024 to fiscal year 2026, whereas the government’s debt growth during the first 11 months of the current fiscal year had declined to a 15-year low of 05 percent, compared with the average growth of 13.7 percent recorded during fiscal year 2011 to 2025.
The highest increase of 23 percent in debt was witnessed in fiscal year 2023, said the Spokesperson of the Federal Government here on Sunday.
He added that the the increase in public debt reflected fiscal financing requirements rather than any shift in debt management policy, adding that greater reliance on domestic borrowing had reduced exposure to exchange rate volatility and external refinancing risks.
He said that the Medium-Term Debt Management Strategy (MTDS) envisages keeping external debt below 40 percent of total public debt. At present, the debt composition stands at around 69 percent domestic and 31 percent external.
The government, he said, had undertaken a number of investor diversification initiatives, including the introduction of JazzCash Treasury Bills, InvestPak, National Savings schemes through the Central Directorate of National Savings (CDNS), the Roshan Digital Account (RDA) programme, and long-tenor as well as zero-coupon Pakistan Investment Bonds (PIBs) to attract both retail and institutional investors.
It said long-tenor PIBs and Government Ijara Sukuk (GIS) had broadened participation by insurance companies and pension funds, while continued fiscal consolidation and investor diversification were expected to gradually reduce reliance on commercial banks and create greater space for private-sector credit.
The government, he said, was taking advantage of improved macroeconomic conditions, including declining inflation and lower interest rates, it had shifted borrowing towards medium- and long-term PIBs and Sukuk. As a result, the Average Time to Maturity (ATM) of domestic debt had increased from 2.8 years in June 2024 to around 3.9 years, significantly reducing rollover risk.
It clarified that higher issuance of Market Treasury Bills (MTBs) was temporary and driven by prevailing market conditions following heightened geopolitical uncertainty and changing interest rate expectations.
Highlighting its debt management strategy, the government said diversification of financing instruments remained a key element of prudent debt management. Sukuk complemented conventional securities by broadening the investor base and mobilizing Shariah-compliant savings.
The plans were also underway to introduce short-term Sukuk with three- and six-month tenors, primarily targeting retail investors to further expand participation in government securities, he remarked.
He expressed the confidence that continued fiscal consolidation and efforts to diversify the investor base would further reduce dependence on bank borrowing while supporting increased lending to the private sector, contributing to sustainable economic growth.
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