Debt pile climbs to Rs98.881tr

Q1FY27 debt servicing hits Rs2.9tr, up 33%, on higher principal repayments, interest

KARACHI:

Pakistan's total debt and liabilities increased by 6.46% to Rs98.881 trillion at the end of September 2026, compared with Rs92.879 trillion a year earlier, according to data released by the State Bank of Pakistan (SBP) on Friday.

The increase was mainly driven by higher government domestic debt and external debt, while total liabilities declined during the period.

The SBP data showed that Pakistan's total debt rose to Rs97.038 trillion in September 2026 from Rs90.107 trillion in September 2025, an increase of Rs6.931 trillion, or 7.69%.

Gross government domestic debt increased to Rs57.758 trillion from Rs53.427 trillion, while public sector enterprises' (PSEs) domestic debt rose to Rs2.084 trillion from Rs2.009 trillion.

Meanwhile, total external debt increased to Rs37.197 trillion from Rs34.671 trillion, a rise of Rs2.526 trillion, or 7.29%.

The breakdown showed that government external debt increased to Rs24.900 trillion from Rs23.181 trillion. Non-government external debt also rose to Rs7.747 trillion from Rs7.387 trillion.

Pakistan's debt from the International Monetary Fund (IMF) increased to Rs3.010 trillion from Rs2.542 trillion, while intercompany external debt from direct investors abroad declined to Rs1.539 trillion from Rs1.561 trillion.

In contrast, total liabilities declined to Rs3.413 trillion in September from Rs4.436 trillion a year earlier. External liabilities fell to Rs2.434 trillion from Rs3.378 trillion, while domestic liabilities decreased to Rs979 billion from Rs1.059 trillion.

Meanwhile, servicing of debt and liabilities increased by 33.27% during the first quarter of FY27, reaching Rs2.900 trillion against Rs2.176 trillion in the corresponding period of FY26, an increase of Rs724 billion.

The increase reflected higher principal repayments of external debt and liabilities as well as interest payments on debt.

"Government debt increased over the year to fund the fiscal deficit. However, during the first quarter of this year, debt declined due to a fiscal surplus run by the authorities," AKD Securities Director Research Mohammed Awais Ashraf told The Express Tribune.

Encouragingly, external liabilities have declined on both local and foreign fronts. The government spent 33% more on debt servicing in the first quarter of FY27 against the same quarter last year due to increased debt servicing on both local and foreign debt, he added.

Principal repayments of external debt and liabilities rose to Rs1.180 trillion during July-September FY27 from Rs634 billion in the same period last year.

"Overall, the country's debt-to-GDP ratio is improving because of prudent spending and higher taxation revenue growth," Ashraf remarked.

Repayments of government external debt and liabilities increased to Rs653 billion from Rs479 billion, while repayments of non-government external debt rose to Rs467 billion from Rs95 billion. Repayments to the IMF remained unchanged at Rs60 billion.

Interest payments on debt increased to Rs1.693 trillion from Rs1.476 trillion, a rise of Rs217 billion, or 14.70%.

Of this amount, interest payments on gross government domestic debt increased to Rs1.388 trillion from Rs1.176 trillion. Interest payments on external debt stood at Rs305 billion, compared with Rs300 billion a year earlier.

The SBP data further showed that interest payments on liabilities declined to Rs28 billion from Rs65 billion during the period, with external liabilities accounting for Rs2 billion against Rs37 billion previously, while domestic liabilities stood at Rs26 billion against Rs28 billion.