Pakistan's central government debt fell 0.5 per cent in August from the previous month to Rs82.953 trillion, though it remained 7.1 per cent higher than a year earlier, central bank data showed on Tuesday. The debt stock fell 0.8 per cent during the first two months (July-August) of the fiscal year 2026-27.

The central government debt has declined so far this fiscal year due to above-target revenue collection and a higher-than-projected transfer of dividends by State Bank of Pakistan (SBP), along with prudent spending, said Awais Ashraf, director of research at AKD Securities Limited. 'External debt almost remained unchanged on the back of strengthening the Pakistani rupee while domestic debt declined by 1.2 per cent during the fiscal year to date,' Ashraf said.

The State Bank of Pakistan (SBP) data showed that domestic debt increased 8.7 per cent year-on-year (YoY) to Rs58.757 trillion in August. However, domestic debt declined 0.9 per cent from the previous month, while external debt rose 3.5 per cent from a year earlier to Rs24.196 trillion in August.

The government later in August made its largest-ever early repayment of domestic debt, retiring Rs1.2 trillion owed to the State Bank of Pakistan (SBP) ahead of schedule, bringing total domestic debt retired before maturity to more than Rs5.92 trillion. The State Bank of Pakistan (SBP) transferred Rs1.9 trillion in profits to the government in FY26, compared with Rs2.5 trillion in FY25.