Pakistan's Domestic Debt Falls by Rs. 1.636 Trillion in First Quarter of FY27

Pakistan's domestic debt declined by Rs. 1.636 trillion during the first quarter of the current fiscal year, according to data released by the State Bank of Pakistan. The outstanding stock fell from Rs. 59.393 trillion at the close of the previous fiscal year on June 30 to Rs. 57.757 trillion by the end of September, marking a notable reversal in the government's borrowing pattern.

The central bank reported that net retirement of scheduled bank debt reached Rs. 1.847 trillion during July to October, compared with just Rs. 45 billion in the same period last year. This indicates that repayments outpaced fresh borrowing over the period.

The reduction was visible across debt instruments. Borrowing through long-term Pakistan Investment Bonds fell by Rs. 1.756 trillion to Rs. 33.543 trillion by the end of September, while short-term Treasury bill borrowing declined by Rs. 1.163 trillion to Rs. 9.640 trillion during the quarter. The government has traditionally favoured long-term bonds over short-term instruments.

The decline comes as government revenues have risen and fiscal consolidation efforts have gained pace under Pakistan's International Monetary Fund programme. Planning Minister Ahsan Iqbal recently said the fiscal deficit narrowed to 2.6 percent of GDP in FY26 from 5.4 percent in FY25, describing it as the lowest level in two decades.

Despite the quarterly drop, domestic debt still grew by Rs. 4.331 trillion over the 12 months ending September 30, reflecting borrowing accumulated during FY26. External debt in rupee terms rose by about Rs. 700 billion, from Rs. 24.2 trillion on June 30 to Rs. 24.9 trillion on September 30.