Pakistan’s total federal government debt climbed to Rs82 trillion by the end of May 2026, increasing by Rs5.9 trillion over the previous year, according to the latest debt bulletin issued by the central bank.
The report showed that total debt grew by 7.8% year-on-year, exceeding the average inflation rate of 7%. The figures exclude government liabilities and loans obtained from the International Monetary Fund (IMF). Federal debt continued to rise throughout the 2025-26 fiscal year, highlighting that government financing needs remained higher than its revenues and indicating the need for stronger debt management.
Separately, the Auditor General of Pakistan raised concerns over the Ministry of Finance’s budgeting practices in its latest audit report. The report stated that Rs1.83 trillion had been allocated unrealistically for the repayment of loan principal, resulting in unnecessary additional expenditures. It recommended strengthening internal oversight and financial controls to ensure more accurate estimates of funds required for debt repayments.
The audit also revealed that the government has not been preparing the mandatory monthly Debt and Losses Report, despite it being required under the Financial Reporting Manual to provide a comprehensive review of the country’s debt position.
Meanwhile, the Finance Ministry’s Debt Management Office has remained without a permanent director general for the past six months. The top position has been vacant since January, with the office operating under interim arrangements, a matter that has already drawn concern from the Senate Standing Committee on Finance.
Data further showed that external debt increased from Rs22.5 trillion to Rs23.8 trillion over the past year. Although exchange rate stability helped limit the increase compared with previous years, short-term external debt jumped sharply from Rs201 billion to Rs2.7 trillion, a change the central bank attributed to a revised debt classification.
Domestic debt also rose to Rs58.1 trillion, up by Rs4.7 trillion year-on-year. Short-term domestic debt increased to Rs10.7 trillion, while long-term domestic debt reached Rs47.3 trillion.
