Pakistan’s total public debt climbed to Rs86.7 trillion by the end of June 2026, marking a sharp increase over the past four years as the government continues to rely heavily on borrowing to finance budget deficits and refinance maturing obligations.
According to the Finance Division’s Annual Borrowing Plan FY2027, public debt stood at approximately Rs49.3 trillion in June 2022, meaning the stock increased by about 76% over the four-year period.
The government’s latest borrowing plan also shows that Pakistan faces gross financing requirements of Rs28.647 trillion during FY2026-27, equivalent to around 20% of projected GDP.
The figures highlight the scale of Pakistan’s financing needs even as authorities seek to lengthen debt maturities, reduce dependence on short-term borrowing and increase the use of fixed-rate instruments.
How Much Public Debt Does Pakistan Have?
At the end of June 2026, Pakistan’s Rs86.7 trillion public debt consisted of:
- Domestic debt: Rs59.4 trillion
- External debt: Rs27.3 trillion
The figures come directly from the Finance Division and are based on State Bank of Pakistan data.
For comparison, Pakistan’s debt portfolio in June 2022 consisted of around Rs31.1 trillion in domestic debt and Rs18.2 trillion in external debt, according to the historical series included in the same government document.
Domestic borrowing therefore accounts for the larger part of Pakistan’s current public debt stock.
Public Debt Has Increased by Rs37.4 Trillion Since 2022
The difference between the June 2022 and June 2026 figures is approximately Rs37.4 trillion.
The increase does not necessarily represent Rs37.4 trillion in fresh spending alone. Public debt can grow because of several factors, including persistent fiscal deficits, refinancing requirements and changes in the rupee value of foreign-currency debt.
The Finance Division states that public borrowing is primarily used to finance the federal fiscal deficit. Over the past 10 fiscal years, an average 81% of the federal deficit was financed from domestic sources, while external sources accounted for the remaining 19%.
This helps explain why domestic debt remains the largest component of Pakistan’s overall public debt portfolio.
Government Plans Another Rs6.86 Trillion in Net Borrowing
For FY2026-27, the federal government projects a fiscal deficit of Rs7.02 trillion.
According to the borrowing plan, financing for that deficit is expected to include:
- Rs6.046 trillion in net domestic borrowing
- Rs813 billion in net external financing
- Rs161 billion from privatisation proceeds
Together, planned net domestic and external borrowing amounts to roughly Rs6.86 trillion during the fiscal year.
These figures are projections rather than final outcomes. The Finance Division notes that financing requirements can change depending on domestic and international economic conditions and debt-market developments.
Pakistan Needs Rs28.65 Trillion in Gross Financing During FY27
The Rs6.86 trillion figure represents new net financing. Pakistan’s overall funding requirement is substantially larger because the government must also repay or refinance debt that matures during the year.
The Annual Borrowing Plan estimates total gross financing needs at Rs28.647 trillion in FY27.
That figure consists of:
| Component | FY27 Amount |
|---|---|
| Federal fiscal deficit | Rs7.020 trillion |
| Debt maturities | Rs21.627 trillion |
| Total gross financing needs | Rs28.647 trillion |
The government estimates these gross financing needs at around 20% of projected FY27 GDP.
This distinction is important: the entire Rs28.65 trillion does not represent new debt. A large part relates to existing obligations reaching maturity and needing repayment or refinancing.
Rs17 Trillion in Domestic Debt Matures This Year
Pakistan faces substantial domestic debt maturities during FY27.
The government estimates around Rs17 trillion in domestic debt maturities, including approximately:
- Rs11.1 trillion in Treasury bills
- Rs3.1 trillion in Pakistan Investment Bonds
- Rs1.9 trillion in Government Ijara Sukuk
- Around Rs0.9 trillion in one-year discounted government sukuk
Most Treasury bill maturities are concentrated in the first two quarters of the fiscal year.
The relatively large maturity burden explains why refinancing existing debt is a major part of annual government borrowing operations.
External Debt Repayments Total $15.6 Billion
Pakistan also faces $15.6 billion in external principal maturities during FY27, according to the Finance Division.
These include approximately:
- $7 billion in bilateral deposits
- $5.3 billion owed to multilateral lenders
- $3.3 billion owed to commercial lenders
The government expects the $7 billion in bilateral deposits to be rolled over. No Eurobond principal repayments are scheduled during FY27 under the current plan.
Rollovers reduce immediate foreign-currency repayment pressure but keep the underlying liability outstanding.
Government Wants to Reduce Reliance on Short-Term T-Bills
One of the main goals of the FY27 borrowing strategy is to reduce refinancing risk.
The Finance Division plans to rely less on short-term Treasury bills on a net-issuance basis while issuing more medium- and long-term securities.
The government plans around Rs4.58 trillion in net Pakistan Investment Bond issuances, with fixed-rate PIBs expected to account for more than half of new issuance.
Longer-dated borrowing can help reduce the frequency with which debt must be refinanced, although the cost and effectiveness depend on market interest rates and investor demand.
Sukuk Issuances Will Also Increase
The government is also expanding its use of Shariah-compliant debt instruments.
Government Ijara Sukuk and Bai Muajjal financing are planned to contribute around Rs3.785 trillion, while total gross sukuk issuance during FY27 is targeted at approximately Rs6.6 trillion.
New structures include hybrid sukuk as well as shorter three- to six-month sukuk instruments.
Pakistan has increasingly relied on government sukuk as part of efforts to diversify its domestic funding sources.
Government Plans More International Bond Issuance
External financing is projected to provide Rs813 billion, or approximately $2.8 billion, on a net basis during FY27.
The Finance Division expects multilateral lenders to remain the main external source, with approximately $1.58 billion in net multilateral inflows planned.
The government also intends to raise more than $2 billion through Eurobonds or international sukuk, subject to global market conditions.
These instruments would allow Pakistan to access international capital markets and potentially replace some shorter-term obligations with longer-duration financing.
Is Pakistan’s Entire Debt Situation Getting Worse?
The headline increase in the nominal debt stock is substantial, but the size of debt alone does not provide a complete picture of debt sustainability.
Other indicators matter, including:
- Debt relative to GDP
- Government revenue
- Interest payments
- Foreign-exchange reserves
- Debt maturity profile
- Proportion of fixed versus floating-rate borrowing
- Ability to refinance existing obligations
- Cost of new borrowing
The Finance Division says the government’s average time to maturity increased from 2.7 years in June 2024 to 3.8 years in June 2026, which reduces the frequency with which parts of the portfolio must be refinanced.
The government also reported that interest expenditure declined by 22% during FY26 and expects gross financing needs to remain around 20% of GDP, compared with 21% in the previous fiscal year. Those are the government’s own assessments in its borrowing plan and should be considered alongside the substantial increase in the overall debt stock.
Debt Was Already Above Rs81 Trillion Halfway Through FY26
Earlier Finance Division data showed that total public debt had reached Rs81.374 trillion by the end of December 2025.
At that point, domestic debt stood at Rs55.363 trillion while external debt accounted for roughly 32% of the total portfolio.
By June 2026, total debt had risen further to Rs86.7 trillion, according to the latest Annual Borrowing Plan.
This means the debt stock continued to grow during the second half of FY26 despite improvements reported by the government in some fiscal and debt-management indicators.
Why Does High Public Debt Matter?
Public debt allows governments to finance deficits, development programmes and other spending when revenue is insufficient.
However, a larger debt stock can also increase the resources required for interest payments and refinancing.
When debt-servicing costs consume a large portion of government revenue, fewer resources may remain available for areas such as infrastructure, health, education and development.
The effect also depends on the structure of the debt. Foreign-currency borrowing carries exchange-rate exposure, while short-term domestic borrowing can increase refinancing risk.
That is why the government’s current strategy is increasingly focused on longer maturities, fixed-rate instruments and a wider range of funding sources.
What Happens During FY27?
Pakistan’s debt trajectory during the current fiscal year will depend heavily on whether the government meets its fiscal targets and how much borrowing is ultimately required.
The Finance Division currently projects a Rs7.02 trillion federal fiscal deficit, together with debt maturities exceeding Rs21 trillion.
The government says it will continue using debt buybacks, exchanges and longer-term securities to improve the debt profile while seeking funding from domestic markets, multilateral institutions and international capital markets.
Actual borrowing can still differ from the annual plan because interest rates, exchange rates, revenue collection, expenditure and external financing conditions can change during the year.
Bottom Line
Pakistan’s public debt reached Rs86.7 trillion at the end of June 2026, up from around Rs49.3 trillion four years earlier — an increase of approximately 76%.
Domestic debt now stands at Rs59.4 trillion and external debt at Rs27.3 trillion. During FY27, the government expects to raise approximately Rs6.86 trillion in net new domestic and external borrowing, while total financing requirements — including maturing debt — are projected at Rs28.647 trillion.
The government is attempting to reduce refinancing risk by moving toward longer-term and fixed-rate securities, but Pakistan’s large debt stock and substantial annual financing needs will remain central issues for fiscal management during FY27.