Pakistan’s domestic debt declined by Rs1.636 trillion during the first quarter of fiscal year 2026-27, reversing the trend recorded in the preceding financial year, according to the latest State Bank of Pakistan (SBP) data.
The government’s total domestic debt stood at Rs57.757 trillion on September 30, down from Rs59.393 trillion on June 30.
The decline comes as government revenue has increased and the fiscal deficit has narrowed. Under its International Monetary Fund (IMF) programme, the government is continuing efforts to reduce the deficit during the current fiscal year.
Planning, Development and Special Initiatives Minister Ahsan Iqbal recently said the fiscal deficit fell to 2.6 per cent of GDP in FY26, compared with 5.4 per cent in FY25. He described the figure as the lowest recorded in two decades.
Government repayments exceed new borrowing
SBP data showed that the government’s net retirement of scheduled-bank debt reached Rs1.847 trillion during July-October FY27, compared with Rs45 billion in the corresponding period last year.
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The figures indicate that government debt repayments to scheduled banks exceeded fresh borrowing during the period.
Borrowing through bonds and Treasury bills declines
Government borrowing through long-term Pakistan Investment Bonds (PIBs) fell by Rs1.756 trillion to Rs33.543 trillion at the end of the first quarter.
The decline marks a shift from the government’s previous emphasis on raising funds through long-term bonds rather than short-term instruments.
Borrowing through short-term Treasury bills also dropped by Rs1.163 trillion to Rs9.640 trillion during the quarter.
External debt rises in rupee terms
While domestic debt declined, external debt increased in rupee terms from Rs24.2 trillion on June 30 to Rs24.9 trillion on September 30, representing a rise of Rs700 billion.
Despite the quarterly decline, total domestic debt increased by Rs4.331 trillion over the 12 months to September 30, reaching Rs57.757 trillion.
The annual increase was largely concentrated in FY26 rather than the first quarter of FY27.
