ISLAMABAD — The federal government announced that recent structural economic reforms have successfully mitigated national debt pressures, enhanced fiscal discipline, and led to a substantial increase in foreign exchange reserves. According to official assessments, these targeted initiatives have effectively reduced debt default risks and fortified overall financial stability. The latest data released by the State Bank confirms that the growth rate of central government debt has plummeted to its lowest level in the last 15 years. Advisor to the Ministry of Finance, Khurram Shahzad, clarified that the actual central government debt stands at PKR 81.9 trillion, explaining that frequently cited figures ranging from PKR 97 trillion to PKR 100 trillion mistakenly incorporate private sector liabilities.
According to fiscal breakdowns, Pakistan’s debt-to-GDP ratio has declined from approximately 76% down to 68%. The pace of government debt accumulation, which experienced a sharp growth rate of 23% in 2023, has decelerated dramatically to just 5%. Furthermore, the average maturity profile of domestic debt has been extended from 2.8 years to 3.8 years, heavily reducing immediate repayment vulnerabilities. For the first time in national history, high-interest loans amounting to PKR 4.7 trillion were prematurely retired or repaid. This strategic move successfully pushed down total interest expenses for the fiscal year 2026 from an estimated PKR 8.89 trillion to PKR 6.94 trillion, yielding a massive net saving of nearly PKR 2 trillion for the national exchequer.
The Advisor to the Ministry of Finance highlighted that interest payments, which previously consumed a staggering 64% of total federal revenue in fiscal year 2023, have now dropped to roughly 40%. Concurrently, the improvement in foreign exchange reserves has drastically enhanced the country’s import cover capacity, elevating it from a precarious two-week window to approximately three months of import safety. Officials emphasized that this positive trajectory in debt settlement and reserve accumulation is a direct consequence of sustainable, long-term policy implementation and robust fiscal management.
