Pakistan’s central government debt growth slowed to 5% in FY26, marking its lowest pace in 15 years, according to Finance Adviser Khurram Schehzad. The government said the trend reflects stronger debt sustainability and prudent fiscal management. The slowdown is expected to reduce financial risks and strengthen confidence in Pakistan’s economic outlook.
Schehzad said comparisons based on absolute debt figures present a misleading picture of sovereign borrowing. He stressed that debt sustainability is measured through internationally accepted indicators, particularly the debt-to-GDP ratio. Citing State Bank of Pakistan data, he said central government debt stood at Rs81.9 trillion. He added that figures between Rs97 trillion and Rs100 trillion include total debt and liabilities, including private sector obligations.
According to the adviser, Pakistan’s debt-to-GDP ratio declined to around 68% in FY26 from nearly 76% in FY19/20. He said the ratio remained close to 75% during FY22/23 before improving this fiscal year. Furthermore, external debt-to-GDP dropped from around 28% to nearly 21%. He noted that the decline significantly reduces external repayment risks.
Schehzad also said central government debt growth slowed sharply from 23% in FY23 to 5% this fiscal year. He described it as the slowest growth rate in 15 years, compared with the historical average of around 12%. Additionally, average domestic debt maturity increased from 2.8 years to 3.8 years. He said the government also retired Rs4.7 trillion in debt for the first time in Pakistan’s history.
The finance adviser said borrowing, repayments, and refinancing are normal practices for every government. However, he argued the key measure is whether debt becomes more sustainable, affordable, and less risky over time. He maintained that Pakistan’s latest debt indicators show progress toward those objectives.