KARACHI: Pakistan’s central government debt increased to Rs81.9 trillion during July-April of the fiscal year ending June 2026, as Rs4 trillion was added in 10 months, underscoring that the government’s funding needs were not satisfied through tax collection and other means, the central bank figures showed on Tuesday.
Total government debt stock saw a year-on-year (YoY) increase of 9.3 per cent at the end of April. On a month-on-month (MoM) basis, the debt rose by nearly 2.0 per cent. The debt increased by 5.0 per cent in 10 months of the current fiscal year, which analysts said is the lowest fiscal-year-to-date rise on record. However, the debt surged by 23 per cent in July-April FY23, reaching its highest point.
The government’s domestic debt amounted to Rs58.1 trillion as of April 2026, up 10.6 per cent from a year earlier. This also reflects a modest month-on-month (MoM) increase of 1.0 per cent. Between July and April of this fiscal year, domestic debt increased by 7.0 per cent.
The external debt rose by 2.0 percent to Rs23.8 trillion during July-April FY26. Compared to April last year, foreign debt increased by 6.0 per cent and rose by 4.0 per cent from March this year.
“Government debt increases to meet the running requirements of the government, which remained unfulfilled through tax revenue and other sources,” said Awais Ashraf, director of research at AKD Securities Limited.
“This is the lowest FYTD increase since the availability of the records during the first 10 months due to government consolidation measures and a significant increase in revenues,” Ashraf added.
He said the sharpest increase was seen in short-term debt as uncertainty increased on the interest rate outlook due to the ongoing conflict in the Middle East.The public debt numbers come ahead of Pakistan’s 2026-27 budget presentation in parliament likely on June 12, along with the central bank’s monetary policy announcement on June 15.
The budget presentation was initially planned for June 5, then delayed to June 10, and has now faced a fresh delay due to unresolved fiscal measures with the International Monetary Fund. Pakistan is currently under a $7 billion IMF bailout program, which has contributed to stabilising and recovering the economy.
Markets and analysts are split wide over the future path of interest rates, driven by volatile energy prices amid Middle East tensions. Some expect further rate hikes, while others anticipate no change in rates at the central bank’s next week’s policy review. The State Bank of Pakistan raised its key interest rate by 100 basis points to 11.5 per cent in April.
Analysts expect Pakistan to record a 21-year low budget deficit of 3.6 per cent of gross domestic product in the current fiscal year, attributed to an expected improvement in fiscal balance resulting from the government’s implementation of a restrictive fiscal policy under the IMF programme, which includes expenditure control and decent revenue growth. The deficit was 5.4 per cent of GDP in FY25.
