MediumIV Macro Policy & Sovereign Debt29 September 2026, Tuesday
Pakistan's public debt rises 76% in four years to 86.7 trillion rupees
The Pakistani Finance Ministry's Annual Borrowing Plan for 2027 shows public debt rose from 49.3 trillion rupees in June 2022 to 86.7 trillion rupees in June 2026. The government plans 6.86 trillion rupees of additional borrowing in fiscal year 2027.
Dawn reported on 30 September that 59.4 trillion rupees of the debt is domestic and 27.3 trillion rupees external. Under the plan, 6.046 trillion rupees of the additional borrowing in fiscal year 2027 will come from the domestic market. A further 813 billion rupees (2.804 billion dollars) will come from external sources. The federal budget deficit is projected at 7.020 trillion rupees. The gross financing need of 28.647 trillion rupees is equivalent to about 20% of national income. The government plans to issue more than 2 billion dollars of eurobonds and sukuk on international markets.
The Express Tribune reported on 13 August that gross public debt rose by 6.2 trillion rupees, or 7.7%, in one year. According to the same report, the ratio of public debt to national income fell from 70.6% to 68.3%, and interest expenditure dropped from 9.5 trillion rupees to 7.3 trillion rupees. Dawn said the Karachi stock exchange's KSE-100 index fell 0.48% to 169,600 points on 29 September. The report attributed the decline to oil prices and the ongoing IMF review.
Talay assessment
Bottom line
Although the ratio of debt to national income is falling, an annual financing need of up to a fifth of national income leaves Pakistan exposed to interest rate and oil shocks. With global yields rising, the 2 billion dollar eurobond plan could prove expensive. A positive outcome to the IMF review is a precondition for the plan.
Likely effects
- Pakistan's external financingNegative1–6 months
High global yields raise the cost of issuing eurobonds and sukuk; the issue could be postponed.
- Domestic marketNegative1–6 months
Domestic borrowing of more than 6 trillion rupees narrows banks' room to lend to the private sector.
- TürkiyeUncertain1–6 months
Competition for investor demand grows among similarly rated issuers coming to market in the same period.
Possibilities, ranked
- 1Plan proceeds with IMF approval55%
The review is completed, the tranche is released and the borrowing calendar runs.
Watch: An IMF staff-level agreement announcement
- 2External issue is postponed30%
Market conditions push the eurobond into 2027, and domestic borrowing rises.
Watch: Pakistan's eurobond yields and an issuance announcement
- 3Programme falters15%
The oil bill and a revenue shortfall prolong the review process.
Watch: The SBP's weekly foreign exchange reserve data
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Public debt, June 2026▼ 86.7 trillion rupees
- Gross financing need / GDP▼ ~20%
- KSE-100, 29 Sep▼ −0.48%