Pakistan is shifting its borrowing mix toward longer tenors as part of a Pakistan debt management strategy meant to reduce how often the government must refinance loans and ease strain on the budget, Finance Minister Muhammad Aurangzeb told the Senate Standing Committee on Finance on Wednesday.
He said the country had been refinancing domestic debt roughly every three months, leaving finances exposed when interest rates moved. Stretching repayment into five-to-ten-year loans, he argued, would let the state manage obligations more steadily.
Debt stock, interest costs and maturity
Finance Secretary Imdadullah Bosal told the same committee that total public debt had reached Rs86.7 trillion in FY2026, compared with Rs24.9 trillion in FY2018. Domestic debt was Rs58.8 trillion in August 2026, Rs684 billion lower than in June, while external debt was described as broadly stable at $98.2 billion.
Despite the larger overall stock, Bosal said the interest burden has eased. Interest payments took 35 percent of government revenue, down from 61 percent in FY2023-24. Cash interest spending fell from Rs8.9 trillion in FY2024-25 to Rs6.9 trillion in FY2025-26, a saving of nearly Rs2 trillion. He said lower rates alone did not explain the drop; a stronger primary budget balance and debt management also played a part.
The average maturity of domestic debt lengthened from 2.7 years in June 2024 to 3.8 years in June 2026. Officials aim to push that further to 4.2 years by FY2028.
Fiscal space and external payments
Aurangzeb said the fiscal deficit had narrowed from about 12.5 percent to 2.5 percent, and that the current account deficit was 0.1 percent of GDP in the last fiscal year. Foreign exchange reserves stood at $21.5 billion, enough for around three months of imports.
For FY2027, external debt servicing is put at $21.5 billion—$17.5 billion in principal and $4 billion in interest. Bilateral rollovers and commercial refinancing have cut the estimated net outflow to about $11 billion. The minister said the government wants less reliance on external borrowing and hopes to avoid emergency support from international lenders.
Timeline: what has happened so far
- FY2018: Total public debt stood at Rs24.9 trillion, according to the finance secretary.
- FY2023-24: Interest payments absorbed 61 percent of government revenue.
- June 2024: Average maturity of domestic debt was 2.7 years.
- FY2024-25 to FY2025-26: Interest expenditure fell from Rs8.9 trillion to Rs6.9 trillion.
- June–August 2026: Average domestic maturity reached 3.8 years; domestic debt was Rs58.8 trillion in August, down Rs684 billion from June; total public debt was Rs86.7 trillion in FY2026.
- FY2028 target: Officials aim to extend average domestic maturity to 4.2 years.
Aasan alfaaz mein
Sarkar ab chhoti muddat ke qarzon ki jagah 5 se 10 saal ke loans lene ki taraf ja rahi hai. Is se har kuch mahine baad naya loan lene ka dabao kam hone ki umeed hai. Interest ke kharche mein lagbhag 2 trillion rupay ki kami batayi gayi hai. Mamooli shehri ke liye seedha matlab yeh hai ke budget mein sood kam jaaye to education, sehat aur bijli jaise kaamon ke liye zyada gunjaish ban sakti hai—agar yeh rujhan jari rahe.
