Sindh has recorded the highest increase in foreign debt among Pakistan's provinces over the past two years, while Punjab continues to hold the largest volume of outstanding foreign loans, according to newly released figures from the federal Ministry of Finance. This data highlights the shifting fiscal landscape across the provinces as they navigate international lending obligations.
A Ministry of Finance document shows that Sindh's foreign debt increased by $1.839 billion over the two-year period, rising from $3.777 billion in June 2024 to $5.616 billion by June 2026. This significant jump reflects the province's reliance on external financing for various development projects and infrastructure initiatives during this timeframe.
Khyber Pakhtunkhwa's foreign debt increased by $595 million during the same period, reaching $2.973 billion in June 2026, compared with $2.378 billion in June 2024. The provincial government has cited the need for reconstruction and social sector development as primary drivers for these external borrowings.
Punjab recorded an increase of $376 million in its foreign debt over the two years; its outstanding debt rose from $6.026 billion in June 2024 to $6.402 billion in June 2026. Despite the slower rate of growth compared to Sindh, Punjab remains the province with the highest total volume of outstanding foreign debt in the country.
Balochistan's foreign debt increased by $33 million, rising from $357 million in June 2024 to $390 million by June 2026. While the absolute figure is lower than other provinces, the incremental rise indicates a continued reliance on foreign-funded projects to address regional development gaps.
Similarly, Gilgit-Baltistan's foreign debt went up by $7 million, from $62 million to $69 million during the period. The region continues to seek international support for climate resilience and infrastructure connectivity projects.
In contrast, Azad Jammu and Kashmir recorded a decline of $29 million in its foreign debt, with outstanding loans decreasing from $209 million in June 2024 to $180 million in June 2026. This reduction marks a rare instance of debt consolidation among the federating units.
According to the Ministry of Finance, the combined foreign debt of provincial governments increased by $2.821 billion over the two-year period, reaching a total of $15.63 billion by June 2026. Economic analysts suggest that this upward trend in provincial borrowing necessitates a more robust strategy for debt management and revenue generation.
The federal government has expressed concerns regarding the sustainability of these debt levels, urging provinces to prioritize fiscal discipline. As the country faces broader macroeconomic challenges, the ability of provinces to service these loans will remain a critical factor in Pakistan's overall financial stability.
Moving forward, the Ministry of Finance is expected to coordinate more closely with provincial finance departments to ensure that foreign-funded projects yield the intended economic benefits, thereby justifying the accumulation of these long-term liabilities.