Pakistan unveils annual borrowing plan for fiscal year 2026-27

The government has released its annual borrowing plan for fiscal year 2026-27, outlining plans to arrange Rs7.02 trillion in financing to meet the federal fiscal deficit.

According to the Finance Ministry, the government plans to raise Rs6.046 trillion from domestic sources and Rs813 billion from external sources. It also expects to generate Rs161 billion through privatisation proceeds.

Pakistan’s total public debt stood at Rs86.7 trillion by June 2026. Domestic debt accounted for Rs59.4 trillion, while external debt stood at Rs27.3 trillion.

The government estimates that its total financing requirements for fiscal year 2026-27 will reach Rs28.647 trillion, equivalent to around 20 per cent of the country’s gross domestic product.

Of the total requirements, Rs17.096 trillion will be needed for principal debt repayments. External debt repayments are estimated at Rs4.531 trillion during the fiscal year.

Under the borrowing strategy, net borrowing through Treasury bills is projected at negative Rs2.592 trillion. At the same time, the government plans to raise Rs4.58 trillion in net new financing through Pakistan Investment Bonds.

The government also plans to introduce a 20-year fixed-coupon bond as part of its efforts to extend the maturity profile of public debt. It has set a target of issuing Rs6.6 trillion worth of Sukuk during fiscal year 2026-27.

The Finance Ministry said the government would limit reliance on short-term borrowing and increasingly focus on longer-term securities. The strategy is aimed at improving debt management and reducing refinancing risks.

External financing inflows are estimated at $13.3 billion during the fiscal year, while total external debt and repayment obligations are projected at $10.5 billion.

The government expects $4.9 billion in external inflows from multilateral institutions. It also plans to raise $2 billion through international bonds.

The Finance Ministry said the average maturity of government debt has improved significantly. It increased from 2.7 years in June 2024 to 3.8 years in June 2026. The government has set a target of extending the average maturity to 4.2 years by 2028.

The ministry also reported a 22 per cent decline in interest-related expenditure during fiscal year 2026. The government plans to continue measures aimed at increasing the participation of retail investors in government securities.