August 19, 2026
By Urdu Report Editorial Team
The decline in Pakistan’s external debt has come to an end, with the country’s external liabilities once again rising sharply.
According to official documents, Pakistan’s external debt increased by more than Rs1,242 billion during the three-month period from March to June 2026.
During the same period, the government’s total debt increased by Rs3,112 billion, taking its combined domestic and external debt to Rs59.441 trillion.
Government domestic debt alone increased by more than Rs1,870 billion during the period.
External Debt Rises from Rs22.958 Trillion to Rs24.2 Trillion
According to the documents, Pakistan’s total external debt stood at Rs22.958 trillion in March 2026. By June 2026, it had increased to Rs24.2 trillion.
The increase comes after external debt had declined by Rs207 billion during the first three months of the year. Between June 2025 and March 2026, Pakistan’s external debt had also recorded a cumulative decline of around Rs458 billion.
The documents show that long-term external debt increased significantly between March and June 2026. It rose from Rs19.720 trillion in March to Rs21.768 trillion by June.
In contrast, short-term external debt declined by Rs506 billion during the same period.
Finance Ministry Attributes Increase to Exchange Rate Fluctuations
The Finance Ministry has previously explained that a significant portion of the increase in external debt is linked to funds received under the International Monetary Fund’s Extended Fund Facility (EFF) and commodity financing arrangements such as the Saudi Oil Fund.
According to the ministry, these facilities do not require immediate repayment in rupee terms.
The ministry has also said that a substantial part of the apparent increase is the result of valuation adjustments caused by fluctuations in exchange rates rather than the accumulation of fresh borrowing.
The government has maintained that it is pursuing policies aimed at reducing the debt-to-GDP ratio, making early debt repayments and strengthening the country’s external accounts.
IMF Projections Also Point to Rising External Debt
The latest increase is also broadly in line with earlier projections by the International Monetary Fund.
The IMF had projected that Pakistan’s external debt could rise to around $126.7 billion during fiscal year 2025-26 and increase further to approximately $131.7 billion in 2026-27.
According to the latest Economic Survey, the government’s external debt had reached $92.2 billion by the end of March 2026.
Of this amount, $82.26 billion was owed by the federal government, while outstanding IMF loans stood at $9.89 billion, accounting for approximately 11 percent of total external debt.
Loans from the World Bank, Asian Development Bank and other multilateral institutions make up the largest share of Pakistan’s external debt, accounting for around 46 percent.
Debt Burden Per Pakistani Continues to Rise
According to the Fiscal Policy Statement presented by the Finance Ministry in Parliament, per capita debt reached Rs333,041 during fiscal year 2024-25, representing an increase of 13 percent from the previous fiscal year.
Economists say a continued increase in debt puts additional pressure on the country’s foreign exchange reserves and increases the burden of interest payments.
Higher debt servicing costs can also directly affect the overall fiscal deficit and limit the government’s financial space.
Social Media Reaction
The news of the increase in external debt triggered reactions from social media users and economic commentators.
Several users questioned whether the rise in external debt, alongside recent increases in petrol and diesel prices, could further intensify inflationary pressures on ordinary citizens.
Some users recalled that the decline in external debt earlier this year had been presented as a sign of economic improvement, while expressing concern over the renewed upward trend.
Economic commentators also called on the government to provide greater clarity regarding debt management and transparency.
Others pointed to the Finance Ministry’s explanation that part of the increase was caused by currency valuation effects rather than new borrowing.
Background
Pakistan is facing a heavy debt repayment schedule during the current fiscal year and remains committed to fiscal discipline under its ongoing Extended Fund Facility (EFF) programme with the IMF.
The government has maintained that the average maturity period of its debt has improved, helping reduce refinancing risks.
However, the continued increase in the overall volume of public debt remains a major challenge for Pakistan’s economy, particularly as the country seeks to maintain external stability, manage debt servicing obligations and strengthen its foreign exchange position.
