Pakistan’s central government debt increased by nearly Rs. 2 trillion during the first eight months of FY2026, mainly due to higher domestic borrowing, according to data released by the State Bank of Pakistan.
Total debt, including both domestic and external liabilities, reached Rs. 79.882 trillion by the end of February 2026. This marks an increase of Rs. 1.994 trillion, or 2.5%, compared to Rs. 77.888 trillion recorded at the end of June 2025.
The increase was largely driven by higher borrowing from the domestic banking system, as government revenue growth remained insufficient to cover overall spending requirements.
Domestic debt rose by 4%, increasing by Rs. 2.207 trillion to Rs. 56.679 trillion during July–February. Within this, long-term debt increased to Rs. 47.481 trillion, while short-term debt also rose to Rs. 9.132 trillion.
In contrast, external debt showed a slight decline of Rs. 214 billion, falling to Rs. 23.203 trillion from Rs. 23.417 trillion at the beginning of the fiscal year.
Despite rising debt, fiscal indicators showed some improvement, with a surplus in the overall balance and a primary surplus close to last year’s level. This was supported by controlled government spending and reduced interest payments.
Tax collection grew by 10.6% during the period but remained below the level needed to meet annual targets.
The State Bank of Pakistan stressed the importance of expanding the tax base and implementing structural reforms to ensure long-term fiscal stability.
The central bank also reduced the cash reserve requirement to inject liquidity into the banking system, aiming to support credit growth and encourage lending to the private sector.