Finance Ministry Rejects Claim of Rs20 Billion Daily Debt Increase

ISLAMABAD: (News Desk) – The Ministry of Finance has rejected reports claiming that Pakistan’s government debt is increasing by Rs20 billion every day, saying the calculation provides an incomplete picture of the country’s debt position.

In a clarification issued on Monday, the ministry said public debt should be assessed in relation to the size of the economy, particularly the gross domestic product (GDP), rather than by dividing the overall increase in debt by the number of days.

According to the ministry, Pakistan’s debt-to-GDP ratio declined from 75 per cent at the end of fiscal year 2023 to 68 per cent by the end of fiscal year 2026. The annual growth rate of government debt also dropped from approximately 26 per cent in FY2023 to 7.7 per cent in FY2026, its lowest level in two decades.

The ministry said the average annual growth rate of government debt between FY2007 and FY2026 stood at 16.7 per cent.

It further reported that central government debt declined by approximately Rs689 billion in August 2026 compared with June 2026.

Pakistan’s external government debt-to-GDP ratio also fell from 33 per cent in FY2023 to 23 per cent by the end of FY2026, according to the ministry.

The statement said external government debt increased from $100 billion at the end of FY2022 to $106.8 billion by the end of FY2026, representing an average annual increase of approximately $1.7 billion.

In comparison, external government debt rose from $54.7 billion in FY2015 to $100 billion in FY2022, an average annual increase of around $6.4 billion, it added.

The ministry also projected a decline in debt servicing costs from approximately Rs8,900 billion in FY2025 to Rs6,900 billion in FY2026. The ratio of debt servicing to total federal revenue was expected to decrease from 64 per cent in FY2023 to 38 per cent in FY2026.

It said the government had repaid more than Rs5,920 billion in high-cost debt ahead of maturity during FY2025, FY2026 and the early part of FY2027.

The average maturity of domestic debt also increased from 2.7 years in FY2024 to approximately four years, helping reduce immediate repayment pressures, the ministry said.

Highlighting improvements in the external sector, the ministry said Pakistan’s foreign exchange reserves had recovered from a low of $2.9 billion to $21.5 billion by September 2026.

The ministry maintained that calculating daily borrowing by dividing the total increase in debt by the number of days could be misleading, as it did not adequately reflect changes in economic output, debt servicing obligations and the overall structure of public debt.

It said the decline in the debt-to-GDP ratio, slower debt accumulation, lower projected debt servicing costs and improved foreign exchange reserves indicated progress in managing the country’s debt burden.

However, the figures and projections cited in the clarification reflect the ministry’s assessment of Pakistan’s fiscal position.