Pakistan Economy: Pakistan's national debt is projected to reach Rs 83.6 trillion by June 2025-26 (excluding IMF and some bilateral loans), a 75% increase over four years.
Pakistan is under a heavy debt burden.
Debts on Pakistan: Pakistan appears to be slowly approaching the brink of complete bankruptcy. According to a new report (through August 2026) released by the State Bank of Pakistan (SBP), the debt burden on Shahbaz Sharif's government in Pakistan is rapidly increasing. A report in The Express Tribune also revealed that government debt has surged in the past four years.
As of the end of June this year, Pakistan's internal, or national, debt, excluding the International Monetary Fund (IMF) and other debts, reached ₹59.44 trillion. Pakistan also faces a foreign debt burden of ₹24.20 trillion in Pakistani currency. Combined, Pakistan's total debt has reached ₹83.6 trillion (Rs. 83,000,000,000,000). Furthermore, the debt has increased by approximately 75% over the past four years.
Pakistan is getting stuck in the quagmire of debt.
Pakistan's economy is currently trapped in a debt trap. According to government data, approximately 40-50% of Pakistan's central budget is spent solely on repaying old debts. The country is also forced to borrow from international markets to pay interest and principal on its old debt, making it difficult to escape the debt trap.
While the government has recently generated substantial revenue from tax collection, its expenditures are substantial. Administrative expenses, maintenance of ministries, and subsidies also consume significant amounts of government funds. Pakistan is borrowing from foreign institutions like the International Monetary Fund (IMF) and the World Bank, but its borrowing from domestic banks and financial institutions is also increasing. As previously mentioned, Pakistan's domestic expenditure is ₹59.44 trillion, a 9% increase over the previous year.
What steps did the government take?
Pakistan's situation is indeed worrying. However, Pakistan has made timely payments on approximately ₹2.9 trillion in debt during the 2025-26 fiscal year, reducing the interest burden somewhat. Furthermore, the country's debt-to-GDP ratio has declined from 75% to 68.5%, indicating a slight improvement in the economy.
