Pakistan federal debt has hit a new record. The latest bulletin from the State Bank of Pakistan (SBP) shows total federal government debt reached Rs82 trillion by the end of May 2026, adding Rs5.9 trillion in just one year. The number is large, but what does it mean in simple terms, and why should ordinary Pakistanis care?
Pakistan Federal Debt Crosses Rs82 Trillion in May 2026
Pakistan’s total federal government debt climbed to Rs82 trillion by the end of May 2026, rising by Rs5.9 trillion over the previous year, according to the latest debt bulletin issued by the central bank. To put that in perspective, Rs5.9 trillion added in twelve months is more than the annual budgets of many large government departments combined.
The report showed that total debt grew by 7.8% year-on-year, a rate that exceeded the average inflation rate of 7%. The figures exclude government liabilities and loans obtained from the International Monetary Fund (IMF). That means the real debt burden is actually larger once those items are counted.
Pakistan’s total central government debt climbed to nearly Rs82 trillion by the end of April 2026, registering an increase of 9.33 per cent compared with the same month a year earlier, according to SBP data. The SBP figures showed that the central government’s total debt rose to Rs81.93 trillion in April 2026 from Rs74.94 trillion recorded in April 2025.
What Drove the Increase in Pakistan Federal Debt?
The single biggest cause is interest payments. From June 2024 to June 2025, total public debt increased from Rs71.25 trillion to Rs80.52 trillion mainly due to an increase in interest payments, the Ministry of Finance reported in its fiscal policy and debt policy statements laid before the National Assembly.
In absolute numbers, total public debt increased by around Rs9.3 trillion to Rs80.52 trillion in FY25 compared with Rs71.25 trillion in FY24, showing an increase of about 13%. Of this, about Rs2.38 trillion in increase was caused by exchange rate impact and about Rs8.9 trillion by interest expense.
Domestic borrowing made up the biggest share of the total. A breakdown of the figures revealed that domestic debt remained the largest component of the government’s borrowing portfolio, with central government domestic debt increasing to Rs58.09 trillion by the end of April 2026, compared with Rs52.52 trillion a year earlier.
On the external side, central government external debt reached Rs23.84 trillion in April 2026, up from Rs22.41 trillion in April 2025. Long-term external debt was recorded at Rs19.73 trillion, while short-term external debt stood at Rs4.11 trillion following a reclassification of a portion of long-term debt into the short-term category, effective from February 2026.
Debt Per Capita Now Over Rs333,000 Per Person
The debt is not just a number on a government spreadsheet. It translates directly into a burden on each citizen. Debt per capita increased from Rs294,098 in FY24 to Rs333,041 in FY25, the Ministry of Finance reported in statements laid before the National Assembly. That means every single Pakistani, including children, effectively owes over Rs333,000 as their share of the government’s debt.
The total public debt-to-GDP ratio increased to 71.7% by the end of FY25 from 67.6% in FY24. Likewise, the total debt of the government increased to 64.3% of GDP in FY25 against 61.8% in FY24. Both figures are still well above the legal ceiling of 60% set under the Fiscal Responsibility and Debt Limitation Act (FRDLA).
Auditor General Raises Red Flags on Budgeting
The debt numbers alone are one concern. How the government manages that debt is another. The Auditor General of Pakistan raised concerns over the Ministry of Finance’s budgeting practices in its latest audit report, stating that Rs1.83 trillion had been allocated unrealistically for the repayment of loan principal, resulting in unnecessary additional expenditures.
The Auditor General recommended strengthening internal oversight and financial controls to ensure more accurate estimates of funds required for debt repayments, and also revealed that the government has not been preparing the mandatory monthly Debt and Losses Report, despite it being required under law.
Is There Any Good News?
A small amount of progress is visible. The government did take one concrete step earlier in the fiscal year. In the first quarter of FY26, domestic debt declined by about 2% to Rs53,424 billion, reflecting the government’s decision to retire Rs1 trillion of borrowing from the State Bank of Pakistan. This helped bring down short-term refinancing risk slightly.
The ministry said that, overall, due to fiscal consolidation policies, the growth in the debt stock had stabilised, compared with 25% in FY22 and FY23. In other words, debt is still growing, but it is growing a little more slowly than it was a few years ago.
The Ministry of Finance has projected that the public debt-to-GDP ratio will fall to around 60.8% by FY28, but that depends on strong revenue collection, controlled spending, and continued economic growth. Federal debt continued to rise throughout the 2025-26 fiscal year, highlighting that government financing needs remained higher than its revenues and indicating the need for stronger debt management.
Why This Matters for Ordinary Pakistanis
A high and rising Pakistan federal debt affects daily life in several direct ways. When a large share of the budget goes to paying interest, less money is left for schools, hospitals, roads, and public services. Economic analysts note that the persistent rise in public debt underscores the government’s ongoing financing needs amid budget deficits, debt servicing obligations, and development expenditures.
Heavy reliance on borrowing also means Pakistan must keep satisfying external lenders. China’s loan rollover helped Pakistan meet the IMF requirement of maintaining over $14 billion in foreign reserves by June 30, 2025, but it also highlights the country’s growing dependence on external borrowing. The continued reliance on debt rollovers, rather than repayment, underscores Pakistan’s worsening debt sustainability.
For businesses and consumers, a large debt load can keep interest rates higher for longer as the government competes with the private sector for available credit in the local market.
Frequently Asked Questions
How much is Pakistan federal debt right now?
According to the latest SBP debt bulletin, Pakistan federal debt stood at Rs82 trillion by the end of May 2026. This is the central government debt figure and does not include IMF loans or all off-budget liabilities.
Why did Pakistan’s debt rise so fast?
The main cause is interest payments. Pakistan spent nearly Rs8.9 trillion on interest in FY25 alone. Exchange rate changes also added around Rs2.38 trillion to the rupee value of external debt. Together, these two factors explain most of the annual increase.
What is Pakistan’s debt-to-GDP ratio?
By end-June 2025, Pakistan’s total public debt-to-GDP ratio stood at about 70.8%. When government guarantees to public sector companies are included, the wider figure rises to 74.5% of GDP. The legal limit under the FRDLA is 60%, which Pakistan has not met in many years.
Will Pakistan’s debt go down in the future?
The Ministry of Finance has projected the debt-to-GDP ratio to fall to around 60.8% by FY28, based on ongoing fiscal consolidation. However, this target depends on keeping spending under control, growing revenues, and stable exchange rates. Analysts say the risk remains high as long as interest payments consume such a large share of the budget.
