Pakistan’s Domestic Debt Drops to Rs57.7 Trillion in Q1 of FY27

KARACHI: The federal government of Pakistan has reported a significant reduction in domestic debt, which fell to Rs57.757 trillion by the end of the first quarter of the fiscal year 2026-27, a decrease from Rs59.393 trillion recorded on June 30. This marks a substantial decline of Rs1.636 trillion within just three months.

The latest figures released by the State Bank of Pakistan indicate that the government’s efforts to manage fiscal responsibilities are yielding results. Minister for Planning, Development and Special Initiatives Ahsan Iqbal noted that the fiscal deficit narrowed to 2.6% of GDP in FY26, a significant improvement from 5.4% in FY25, representing the lowest fiscal deficit in two decades. This reduction aligns with the government’s ongoing commitment to fiscal discipline under the International Monetary Fund (IMF) program.

The data also reveals a sharp increase in the government’s net retirement of scheduled bank debt, which surged to Rs1.847 trillion during July-October FY27, compared to just Rs45 billion in the same period last year. This trend indicates that debt repayments are now exceeding new borrowing, reflecting a more cautious approach to fiscal management.

As the government continues to tighten its fiscal policies, analysts anticipate further measures aimed at sustaining this downward trend in debt. Upcoming budgetary reviews and discussions with the IMF will likely shape the economic landscape in the coming months, as the government seeks to maintain fiscal stability and promote economic growth.