Pakistan expects to save up to Rs500 billion in debt-servicing costs during the ongoing fiscal year (FY26), supported by a stable interest rate environment, according to the Ministry of Finance.
Speaking at the Sustainable Development Policy Institute’s (SDPI) annual conference on Wednesday, Director General (Debt) Mohsin Mushtaq said the government’s debt-management strategy and adherence to transparent reporting standards were helping strengthen market confidence.
“Pakistan has adopted a robust, internationally aligned debt-reporting framework in line with IMF recommendations,” he said, adding that the government has implemented a medium-term debt strategy (2025–28) and now issues half-yearly debt reports to ensure transparency and predictability.
He noted that public debate on external debt should be handled responsibly to prevent market disruption, emphasizing that “technical definitions aside, Parliament has the final authority over how debt is classified.” Mushtaq added that a Debt Coordination Committee had been formed to improve oversight and data reconciliation across institutions.
Earlier this year, the government allocated Rs8.2 trillion for debt servicing in the FY26 budget.
However, National Assembly Standing Committee on Finance Chairman Syed Naveed Qamar warned that Pakistan’s borrowing trend had reached an unsustainable level, urging Parliament to enforce fiscal discipline.
“Debt servicing is eating up fiscal space,” he said. “It’s time to cut unnecessary spending and renegotiate loans. All governments are responsible for this borrowing spree — and Parliament must now act as the check.”
Qamar criticised Pakistan’s tight monetary policy, saying while inflation control is important, prolonged high interest rates are eroding fiscal flexibility. He proposed a parliamentary approval process for all external and domestic borrowing to enhance transparency and oversight.
Meanwhile, Muzzammil Aslam, Adviser to the Khyber Pakhtunkhwa Finance Ministry, called for establishing an independent debt-reporting authority, similar to the Pakistan Bureau of Statistics (PBS), to consolidate data and provide a true picture of national liabilities.
He claimed Pakistan’s actual debt exceeds Rs90 trillion once unreported obligations — including circular debt, pension liabilities, and commitments under Roshan Digital Accounts — are accounted for. “The Fiscal Responsibility and Debt Limitation (FRDL) Act needs revision,” he said, noting that fragmented reporting distorts risk assessment and policy planning.
