Pakistan's national debt has witnessed a staggering increase of Rs18,143 billion during the first two-and-a-half years of Prime Minister Shehbaz Sharif's administration. This rapid accumulation of liabilities, occurring between March 2024 and August 2026, translates into an alarming average daily increase of approximately Rs20 billion, raising significant concerns regarding the country's fiscal sustainability.
The latest data, released through official documents by the State Bank of Pakistan (SBP), highlights the deepening economic challenges facing the federal government. According to these records, the period from March 2024 to August 2026 saw the federal government's domestic debt surge by Rs16,082 billion, while external debt obligations rose by Rs2,061 billion.
As a consequence of these borrowings, the federal government's total debt reached an unprecedented Rs82,953 billion by the end of August 2026. This marks a sharp escalation from the Rs64,810 billion recorded in February 2024, which served as the final month of the preceding caretaker government's tenure.
A breakdown of the domestic debt reveals that it stood at Rs42,675 billion in February 2024. By August 2026, this figure had climbed to Rs58,757 billion, reflecting a heavy reliance on local banking channels to bridge the widening fiscal deficit.
This trend has sparked debates among economists regarding the crowding out of private sector credit. Simultaneously, the federal government's external debt profile also saw a notable expansion.
The external liabilities, which amounted to Rs22,134 billion in February 2024, rose to Rs24,196 billion by August 2026. While the growth in external debt appears slower than domestic borrowing, the impact of currency fluctuations and interest payments remains a critical factor in the overall debt servicing burden.
Financial analysts suggest that the consistent rise in debt is primarily driven by high interest payments and the government's inability to significantly curtail its expenditure. The reliance on short-term domestic borrowing has further exacerbated the cost of debt servicing, leaving limited fiscal space for development projects.
The government has frequently cited the need to stabilize the economy and meet international financial obligations as the primary reasons for this borrowing spree. However, the sheer scale of the daily increase has drawn criticism from opposition leaders and independent economic observers alike.
Looking ahead, the sustainability of this debt trajectory remains a point of contention with international lenders, including the International Monetary Fund (IMF). Experts warn that without structural reforms aimed at increasing tax revenue and reducing the cost of governance, the debt-to-GDP ratio may continue to pose a threat to long-term economic stability.
The State Bank of Pakistan (SBP) continues to monitor the situation closely, as the government faces the dual challenge of managing inflation while attempting to stimulate growth. The upcoming fiscal policy reviews are expected to focus heavily on debt management strategies to prevent further escalation.
As the Shehbaz Sharif government enters the next phase of its term, the pressure to demonstrate fiscal discipline is mounting. Whether the administration can pivot toward a more sustainable economic model remains the central question for Pakistan's financial future.