Pakistan’s Central Govt Debt Rises to Rs. 78.24 Trillionin July FY26

Pakistan’s central government debt climbed to Rs. 78.238 trillion in July, the first month of FY26, up Rs. 350 billion or 0.4 percent from June, according to State Bank of Pakistan (SBP) data released on Wednesday. Year-on-year, the debt increased by 12.4 percent, indicating the government’s continued reliance on borrowing to fill fiscal gaps. Analysts attributed the build-up primarily to financing the budget deficit and servicing costs on existing liabilities. In a statement on Tuesday, the Finance Ministry said debt management will prioritize aligning the public debt-to-GDP ratio with the Fiscal Responsibility and Debt Limitation Act, while minimizing refinancing and rollover risks and unlocking interest savings. The ministry noted that Pakistan’s debt metrics have improved over recent years, with the debt-to-GDP ratio easing from 74 percent in FY22 to 70 percent in FY25. It added that the government has reduced rollover exposure and achieved “substantial” interest savings. Highlighting a shift toward early repayments, the ministry said the government prepaid Rs. 2,600 billion before maturity, across commercial and central bank obligations, for the first time in the country’s debt history. The move, it said, curtailed rollover and refinancing risks and generated “hundreds of billions of rupees” in interest savings. In its monetary policy statement on Monday, the SBP reported that the Federal Board of Revenue’s tax collection grew 14.1 percent year-on-year in the first two months of FY26. The central bank added that the transfer of a sizeable budgeted profit of Rs. A 2.4 trillion rupee allocation from the SBP to the government, alongside higher petroleum levy collections, is expected to help deliver a significant primary surplus in Q1-FY26. However, the SBP cautioned that recent floods could push up current expenditures and potentially slow revenue collection in the near term.