Pakistan’s Federal Government Debt Climbs to Rs82 Trillion as Audit Report Reveals Major Financial Irregularities

Islamabad: Pakistan’s federal government debt rose to Rs82 trillion by the end of May 2026, marking an increase of Rs5.9 trillion over the past year, according to the latest debt bulletin released by the State Bank of Pakistan.

The report showed that the government’s total debt, excluding liabilities and loans from the International Monetary Fund (IMF), increased by 7.8% year-on-year, exceeding the average inflation rate of 7%. The steady rise in debt throughout fiscal year 2025-26 indicates that the government’s financing needs continue to outpace its revenues, highlighting the need for stronger debt management.

Meanwhile, the Auditor General of Pakistan raised serious objections in a recent audit report, stating that the Ministry of Finance had allocated an unrealistic Rs1.83 trillion for the repayment of principal debt. The audit said this inaccurate budgeting resulted in unnecessary additional expenditures.

The report recommended strengthening the Ministry of Finance’s internal monitoring and control mechanisms to ensure more accurate estimates of the government’s actual debt repayment requirements.

The audit also revealed that the government has not been preparing the mandatory Monthly Debt and Losses Report in accordance with the Financial Reporting Manual. The report, which is required every month, provides a comprehensive assessment of the country’s debt position.

In another concern, the Ministry of Finance’s Debt Management Office has been operating without a permanent Director General for the past six months. The position has remained vacant since January, with the office functioning under interim management. The Senate Standing Committee on Finance has also expressed concern over the prolonged vacancy.

According to official figures, Pakistan’s external debt increased from Rs22.5 trillion to Rs23.8 trillion over the past year. Although the appreciation of the Pakistani rupee helped limit the overall increase compared to previous years, short-term external debt surged sharply from Rs201 billion to Rs2.7 trillion, a change the State Bank attributed to a revision in debt classification.

The report further showed that domestic debt climbed to Rs58.1 trillion, up by Rs4.7 trillion during the year. Short-term domestic debt rose from Rs8.1 trillion to Rs10.7 trillion, while long-term domestic debt reached Rs47.3 trillion.

With the continued expansion of public debt, the government’s debt servicing burden has also increased significantly. Interest payments alone are expected to exceed Rs8 trillion during the current fiscal year, placing additional pressure on the country’s public finances.