In a major development on the economic front, Pakistan recorded a significant reduction of over Rs. 1.2 trillion in government debt during the first quarter of the current fiscal year 2025–26. This improvement was largely driven by strong profit transfers from the State Bank of Pakistan (SBP).
According to SBP data, the country’s total public debt—including both domestic and external liabilities—fell by Rs. 1.283 trillion during July–September FY26. Total debt, which stood at Rs. 77.888 trillion at the end of June 2025, declined to Rs. 76.605 trillion by the end of September 2025.
The SBP figures show that the bulk of this decline came from domestic debt, which dropped by Rs. 1.048 trillion, settling at Rs. 53.424 trillion in September 2025.
Analysts described this early reduction in government debt as a positive indicator, suggesting that it will help ease the burden of interest payments. They noted that the government and SBP have managed debt more efficiently this year, with the central bank’s substantial profit transfer playing a pivotal role.
Analysts added that continued fiscal consolidation will help keep net budget borrowing under control, allowing greater room for private-sector credit to support sustained economic growth.
Under domestic debt, long-term debt registered a noticeable decline of Rs. 692 billion, dropping from Rs. 45.653 trillion in June 2025 to Rs. 44.961 trillion in September 2025. Similarly, short-term debt fell by Rs. 356 billion, decreasing from Rs. 8.756 trillion to Rs. 8.4 trillion during the same period.
However, borrowing under the Naya Pakistan Certificates increased slightly from Rs. 62 billion to Rs. 63 billion in Q1 FY26.
Pakistan’s external debt (in rupee terms) also decreased by Rs. 236 billion, standing at Rs. 23.181 trillion at the end of September 2025 compared to Rs. 23.417 trillion in June 2025.
The SBP recorded a strong profit of Rs. 2.5 trillion last fiscal year, out of which Rs. 2.4 trillion was transferred to the federal government. This income significantly contributed to reducing the overall debt burden on the economy.
