Pakistan's debt-to-GDP ratio fell to 68.3 per cent in the fiscal year ended in June, but analysts say further reducing the debt burden will require a more sustainable fiscal position and greater resilience to future economic shocks.
"Pakistan's total debt-to-GDP ratio has improved significantly - from around 77 per cent of GDP to about 68 per cent - reflecting the impact of the strict stabilisation and fiscal-discipline policies pursued over the last few years," Mohammed Sohail, CEO of Topline Securities, said in a post on social media platform X on Saturday.
"However, there is still a long way to go. Pakistan needs to bring the debt burden down towards 60 per cent of GDP or below to create a more sustainable fiscal position and reduce vulnerability to future economic shocks," Sohail said, adding that the Fiscal Responsibility and Debt Limitation Act, 2005, established a framework for bringing public debt down towards the 60 per cent threshold.
He noted that successive governments struggled to consistently comply with the required fiscal discipline, contributing to the debt and balance-of-payments pressures Pakistan has experienced in recent years. "The recent improvement is encouraging - but debt reduction must remain a long-term policy, not just a stabilisation-cycle achievement," he said.
Pakistan's gross public debt increased to Rs86.714 trillion by the end of June, up from Rs80.518 trillion a year earlier. During FY26, Pakistan's total debt and liabilities rose to Rs99.587 trillion compared to Rs94.387 trillion in the previous month. In dollar terms, Pakistan's total outstanding external debt and liabilities increased to $138.85 billion as of June, up from $135.639 billion in the previous year.
The country's external debt servicing rose to $10.137 billion in the fourth quarter of FY26 compared to $3.855 billion in the third quarter, bringing the total of these payments to $21.591 billion in the 12 months of last fiscal year. The country's external debt-to-GDP dropped to 21.5 per cent in FY26 as external debt in dollar terms grew at a lower pace of 7.0 per cent than the nominal GDP growth rate of 11 per cent.