According to Finance Adviser Khurram Schehzad, the figures released by SBP indicate that the growth of central government’s debt is slower than in 2011, and the external debt/GDP ratio has gone down from 28% to 21%, while Pakistan has paid off Rs4.7 trillion of its debt, a historic first for the country.
The growth in Pakistan’s public debt has been sharper than ever seen in the last 15 years. As stated by Khurram Schehzad, Adviser to the Finance Ministry on Friday, Pakistan public debt for the fiscal year 2026 increased only 5%, which is the lowest growth recorded in the last 15 years as compared to an average increase of 12% in the past 15 years. According to the data provided by the State Bank of Pakistan, it is regarded as a turning point for the country’s debt sustainability.
Clarification on Rs97-100 trillion total debt figure floating around
According to the SBP, the national government’s total debt is Rs81.9 trillion, as opposed to the larger figure which encompasses the debts of both private sector and national government.
“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.” — Khurram Schehzad, Finance Adviser
Debt to GDP ratio – the metric that counts
The ratio has fallen from about 76% in fiscal year 19/20 and remained at 75% during FY22/23 before falling to 68% in FY26.
The external debt situation is even more encouraging. Pakistan’s external debt to GDP ratio has dropped from about 28% in FY19/20 to about 21% in FY26 – a decrease by seven percentage points which Schehzad identified as highly important as it makes Pakistan less susceptible to problems related to exchange rate depreciation and repayments of foreign currency debts, which used to be Pakistan’s major debt triggers.
| Metric | FY19/20 | FY22/23 | FY26 |
|---|---|---|---|
| Total debt-to-GDP | ~76% | ~75% | ~68% |
| External debt-to-GDP | ~28% | ~28% | ~21% |
| Debt growth rate | — | 23% | 5% |
| Avg domestic debt maturity | — | 2.8 years | 3.8 years |
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Two structural changes apart from the headline growth numbers
Schehzad also mentioned two developments that go beyond the headline growth number for Pakistan public debt FY26. The average maturity period of internal debt is now 3.8 years as against 2.8 years. This means less refinancing risk because there is always the possibility that the government will have to refinance large amounts of debt that have matured in the same year and at prevailing interest rates.
The second landmark achievement is unparalleled since the nation has retired a total of Rs4.7 trillion worth of debt, which has never happened in the nation’s history before. The process of retiring debt is not same as refinancing it because it lowers down the amount of total debt and does not push back its maturity dates.
Framing desired by Schehzad
The financial adviser concluded with a restatement of the question that he thinks Pakistanis ought to ask about their national debts – that is, not how much it is, but rather whether it is on course towards being sustainable, affordable, and risk-free. With a growing GDP of 5%, a decreasing ratio of debt to GDP, decreasing external debt, long maturity, and the first instance of retiring debt for the country, his answer is “yes,” although all governments borrow and repay debts.
Nayab Fatima is a media professional specializing in fact-based journalism, research, and analytical reporting on technology, telecom, aviation, and automobiles.
