Pakistan’s debt growth hits 15-year low as debt burden continues to ease

Pakistan's central government debt growth has slowed to its weakest pace in 15 years, while key debt sustainability indicators have continued to improve, according to the latest figures cited by the government on Friday.

Finance Adviser Khurram Schehzad said central government debt has increased by only 5% so far in FY26, a sharp slowdown from 23% growth recorded in FY23 and well below the historical annual average of around 12%.

The slower pace of borrowing comes alongside an improvement in Pakistan's debt burden relative to the size of its economy. The country's debt-to-GDP ratio has declined to around 68% in FY26 from approximately 75% in FY22/23 and about 76% in FY19/20, according to data released by the State Bank of Pakistan (SBP).

Pakistan has also reduced its exposure to external debt, with external debt-to-GDP falling to around 21% in FY26 from roughly 28% in both FY22/23 and FY19/20, a development the government says has significantly lowered external repayment risks.

The government also pointed to improvements in the composition of public debt. The average maturity of domestic debt has been extended from 2.8 years to 3.8 years, reducing refinancing pressure, while Rs4.7 trillion in debt has been retired, which Schehzad described as a first for Pakistan.

Addressing claims circulating on social media over the country's debt stock, Schehzad said sovereign debt should be assessed through internationally accepted sustainability indicators rather than headline rupee figures.

He said Pakistan's central government debt currently stands at Rs81.9 trillion, based on SBP data. The higher figure of Rs97 trillion to Rs100 trillion being circulated, he said, represents total debt and liabilities, which also include private sector liabilities and should not be confused with central government debt.

"Some social media posts compare governments using absolute debt figures. That is not how sovereign debt is assessed anywhere in the world. Debt is not measured by headlines. It is measured by sustainability," Schehzad said in a post on X.

He added that governments routinely borrow, refinance and repay maturing obligations, arguing that the more meaningful measure is whether debt is becoming more sustainable, affordable and less risky.

"The real question is whether debt is becoming more sustainable, more affordable, and less risky. Today, the answer is yes," he said.

This version is reordered in a more wire-service style: it leads with the news, groups all debt metrics together, then moves to structural improvements, followed by the government's response to the social media claims and ends with the quotes. It reads less like the original while preserving all of the facts and figures.