Pakistan’s total debt burden nears Rs84 trillion as government borrowing rises

Pakistan’s total government debt stock climbed to a record level of nearly Rs84 trillion by the end of June 2026,

Pakistan’s total government debt stock climbed to a record level of nearly Rs84 trillion by the end of June 2026, highlighting the growing financial burden facing the country amid continued reliance on domestic and external borrowing.

According to the latest data released by the State Bank of Pakistan (SBP), the federal government’s total debt increased by 7.4% on a year-on-year basis during the fiscal year ended June 2026.

The central government’s debt stood at Rs83,642 billion in June 2026, compared with Rs77,888 billion recorded in June 2025. The debt stock also increased significantly on a monthly basis, rising from Rs81,955 billion in May 2026.

The latest figures indicate that the government’s debt increased by around Rs5,754 billion, or Rs5.75 trillion, over the course of the fiscal year.

Domestic debt remains major component

Domestic borrowing accounted for the largest portion of the government’s total debt. According to SBP data, the federal government’s domestic debt rose by 9.1% year-on-year to Rs59,441 billion by June 2026.

The increase reflects continued dependence on the domestic financial market to meet the government’s financing requirements, including budgetary needs and debt-servicing obligations.

Meanwhile, the federal government’s external debt increased by 3.3% during the year, reaching Rs24,201 billion by June 2026.

Although the growth in external debt remained comparatively lower than domestic borrowing, the foreign-currency component continues to place pressure on the country’s external financing position, particularly when debt repayments coincide with periods of weak foreign exchange inflows.

Debt servicing poses growing challenge

The continued rise in the debt stock is also raising concerns about the government’s ability to manage debt-servicing costs while creating fiscal space for development spending and public services.

A growing share of government revenues is required to meet interest and principal repayment obligations, limiting the resources available for infrastructure, social development and other productive investments.

Economic experts have warned that if the debt trajectory is not brought under control, the rising burden could turn into a “debt trap” for the economy.

They argue that reducing dependence on borrowing would require stronger revenue mobilisation, greater fiscal discipline, higher exports and sustained economic growth. Improving the efficiency of public spending and reducing reliance on debt-financed expenditures could also help contain the pressure.