ISLAMABAD: The news report titled “Rs20bn debt increase per day during Shehbaz govt,” recently published in the media, presents an incomplete picture of Pakistan’s public debt and may lead to misinterpretation. In this regard, the following facts may be noted:
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Debt is a nominal variable and generally increases over time. This is true for most countries, including Pakistan. Therefore, to understand the actual debt burden and its implications, debt should be assessed in relation to the size of the economy, particularly nominal GDP.
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Pakistan’s debt-to-GDP ratio has declined over the past few years, reflecting prudent fiscal management and improving debt dynamics. Government debt fell from 75% of GDP at end-FY23 to 68% by end-FY26.
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The pace of increase in government debt has slowed significantly. During FY23, government debt grew by approximately 26%. In FY26, growth slowed to 7.7%—the lowest in two decades, compared with an average annual increase of 16.7% over FY07–FY26. Moreover, the latest August 2026 data shows that central-government debt declined by approximately Rs689 billion since June 2026. With regard to external debt, the following facts are important:
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The increase in government external debt in US-dollar terms has been significantly lower in recent years than in the past.
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Public-sector external debt, a broader measure of official external debt, declined from 33% of GDP in FY23 to 23% by end-FY26.
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Even in dollar terms, external debt has grown much more slowly. From end-FY22 to end-FY26, public sector external debt increased from $100 billion to $106.8 billion, averaging approximately $1.7 billion per year. In comparison, it increased from $54.7 billion to $100 billion between end-FY15 and end-FY22, averaging approximately $6.4 billion per year. Additional improvements in debt management:
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Debt-servicing costs have declined*, from Rs8.9 trillion in FY25 to an estimated Rs6.9 trillion in FY26. Debt servicing as a share of gross federal revenue has also improved from 64% in FY23 to 38% in FY26.
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The government has repaid approximately Rs5.9 trillion in expensive debt ahead of schedule across FY25, FY26 and early FY27. The average repayment period of domestic debt has increased from 2.7 years in FY24 to around 4.0 years, reducing repayment pressures.
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Pakistan’s foreign-exchange reserves have strengthened significantly, rising from an earlier low of $2.9 billion to $21.5 billion by September 2026, improving the country’s ability to meet external payments.
The finance ministry emphasises that dividing the nominal increase in outstanding debt by the number of days does not accurately reflect fresh borrowing or the country’s debt position. The key facts are that Pakistan’s debt burden relative to GDP has declined, debt growth has slowed sharply, repayment costs have reduced, and external financial buffers have strengthened.
Copyright Business Recorder, 2026
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