Summary Pakistan’s Finance Ministry says government debt growth slowed to 7.7% in fiscal year 2026, while the debt-to-GDP ratio fell to 68% and debt servicing estimates declined to Rs6.9 trillion.
ISLAMABAD (Web Desk) – Pakistan’s Finance Ministry has reported a slowdown in the pace of government debt accumulation, saying the country’s debt-to-gross domestic product (GDP) ratio has declined from 75% to 68%.
According to the ministry, the annual growth rate of debt fell from 26% in fiscal year 2023 to 7.7% in fiscal year 2026, reflecting a reduction in the pace at which government liabilities have been increasing.
The ministry also reported that the federal government’s debt declined by Rs689 billion in August 2026. Meanwhile, the share of external debt in public-sector borrowing fell from 33% to 23%, according to the statement.
Pakistan’s debt servicing burden has also eased, the ministry said. The estimated cost of debt servicing declined from Rs8.9 trillion in fiscal year 2025 to Rs6.9 trillion in fiscal year 2026.
The proportion of government revenue used to meet debt servicing obligations also decreased, falling from 64% to 38%, according to the ministry’s figures.
The Finance Ministry further stated that the government had repaid approximately Rs5.9 trillion in expensive debt ahead of schedule since fiscal year 2025. It said the average maturity of domestic debt had also been extended to reduce immediate repayment pressures.
Pakistan’s foreign exchange reserves have also increased, according to the statement. The ministry reported that reserves rose from $2.9 billion to $21.5 billion by September 2026.
The figures come amid continued scrutiny of Pakistan’s public finances, including the cost of borrowing, the burden of interest payments and the country’s reliance on domestic and external financing.
While the ministry’s figures point to improvements in several debt indicators, a lower debt-to-GDP ratio and slower debt growth do not necessarily mean that the country’s overall debt burden has disappeared. Debt sustainability also depends on economic growth, government revenue, borrowing costs and the ability to meet future repayment obligations.
The reported figures reflect the Finance Ministry’s assessment of recent fiscal developments. Independent evaluation of the country’s debt position would require examining the underlying data, definitions and comparable fiscal indicators.
