ISLAMABAD: Pakistan’s debt growth rate has fallen to its lowest level in 20 years, with the country’s debt increasing by 7.7% during fiscal year 2025-26, the Finance Ministry said.
According to the ministry, the average annual debt growth rate over the past 20 years was 16%. The country’s debt-to-GDP ratio also declined to 68.3% during the fiscal year.
The debt-to-GDP ratio stood at 75% in fiscal year 2022-23, while it remained between 86% and 88% from 2019 to 2021, the ministry said.
Pakistan’s external debt-to-GDP ratio fell to 21.5%, its lowest level in nine years, according to the Finance Ministry.
The ministry said the country’s foreign exchange reserves increased from $2.9 billion to $18.4 billion. Pakistan also repaid Rs4.72 trillion in debt ahead of schedule, while annual interest expenses declined by nearly Rs2 trillion.
The burden of interest payments on government revenue fell from 61% to 35%, while Pakistan recorded a primary budget surplus for the third consecutive year, the ministry said.
The ministry also said Pakistan returned to international capital markets after a four-year gap. Demand for the country’s Panda bond was nearly five times the amount issued.
S&P Global Ratings upgraded Pakistan’s outlook to stable, with the country’s rating reaching its highest level in nearly nine years, according to the Finance Ministry.
More read, Finance Ministry releases monthly economic outlook of Pakistan
Earlier, The Ministry of Finance Pakistan has released its monthly economic outlook report, presenting a mixed picture of the country’s macroeconomic performance, with several indicators showing improvement while others remain under pressure.
According to the report, the State Bank of Pakistan has set the policy interest rate at 11.5%, reflecting its latest monetary stance. Non-tax revenue recorded a 7.7% increase, indicating improved government income from non-tax sources.
Remittances from overseas Pakistanis showed strong growth, rising by 8.2% to $30.3 billion during July to March, highlighting continued support from the diaspora.
