Federal Minister for Finance Muhammad Aurangzeb has said that Pakistan’s debt to GDP ratio has declined from around 74 percent to nearly 70 percent over the past three years.
According to sources, the finance minister made these remarks on Monday while participating in a high level roundtable discussion on managing sovereign debt risks at the AlUla Conference 2026. The conference is being jointly organized by the Government of Saudi Arabia and the International Monetary Fund.
Sources said the finance minister stated that Pakistan has made early but meaningful progress in restoring economic stability through disciplined economic policies, institutional reforms, and active debt management. However, he also acknowledged that the reform process is still ongoing.
The finance minister said Pakistan is moving on a path to contain and better manage public debt, including extending maturities, reducing debt servicing costs, and making early repayments of certain loans. As a result, over the past three years the debt to GDP ratio has declined from about 74 percent to nearly 70 percent, while the external debt to GDP ratio has remained stable. These measures have also helped generate significant savings in interest costs, smooth out maturities, and reduce refinancing risks.
During his remarks, the finance minister noted that public debt levels globally remain at historic highs, placing continued pressure on emerging and developing economies due to rising debt servicing costs, tighter financing conditions, and limited fiscal space. He stressed that the key policy challenge is not only managing the size of debt, but also preventing liquidity pressures from turning into a solvency crisis, while safeguarding growth enhancing spending and social welfare funding.
Muhammad Aurangzeb referred to remarks by the Saudi Minister of Finance, who observed that macroeconomic stability is not an enemy of growth, but rather an essential foundation for sustainable and long term economic expansion. He noted that Pakistan’s recent experience strongly supports this view.
The finance minister also highlighted that Pakistan has institutionalized the debt sustainability analysis process on a consistent and transparent basis in line with IMF and World Bank methodologies, covering domestic and external debt as well as government guarantees. He said this shift has improved risk identification, strengthened engagement with creditors, and enhanced market confidence, in line with the objectives of the G20 Common Framework.
He further highlighted progress in mobilizing domestic resources, noting that Pakistan has increased its tax to GDP ratio, which has now reached close to 12 percent from single digit levels in previous years, due to tax reforms, digitalization, and expansion of the tax base.
In addition, Muhammad Aurangzeb drew attention to Pakistan’s efforts to align debt management with environmental and development goals, including the issuance of green sukuk and the establishment of a sovereign sustainable financing framework.
According to sources, concluding his remarks, the finance minister emphasized that addressing sovereign debt vulnerabilities requires timely action, strong institutions, transparency, and credible policy frameworks, supported by improved global coordination.
