SBP profits help Pakistan trim Rs1.2 trillion from central govt’s debt

Pakistan’s central government debt dropped sharply during the first quarter of fiscal year 2026, reflecting early signs of fiscal consolidation, official data showed.

According to the State Bank of Pakistan, public debt, including both domestic and external obligations, fell by Rs1.283 trillion between July and September, reaching Rs76.605 trillion by the end of September 2025. This compares with Rs77.888 trillion recorded in June.

The decline was largely driven by domestic debt, which contracted by Rs1.048 trillion to Rs53.424 trillion. Long-term domestic debt fell by Rs692 billion to Rs44.961 trillion, while short-term borrowing declined by Rs356 billion to Rs8.4 trillion. Debt under the Naya Pakistan Certificate, however, rose slightly to Rs63 billion.

External debt also decreased, falling by Rs236 billion to Rs23.181 trillion by September. Analysts credited the reduction to effective management of debt obligations and strong profit transfers from the central bank to the federal government.

The SBP transferred Rs2.4 trillion of its Rs2.5 trillion profit earned last fiscal year to the federal government, easing the overall debt burden. Experts said the contained net budgetary borrowing and ongoing fiscal consolidation could create room for private sector credit, supporting steady economic growth.

The early drop in government debt is being seen as a positive signal for the economy, potentially lowering interest payment pressures and improving fiscal stability in the months ahead.