Key points

  • Pakistan’s external debt stood at Rs 24,109 billion in July 2026, according to the State Bank of Pakistan.
  • This figure is more than Rs 850 billion higher than the level recorded for the same month a year earlier.
  • The rise reflects continued reliance on overseas financing to cover balance‑of‑payments shortfalls and to fund large‑scale development schemes.
  • Economists caution that a swelling debt stock could tighten fiscal space and make the economy more vulnerable to external shocks.

Pakistan’s foreign liabilities have edged upward for several consecutive years, and the latest SBP data shows the stock reaching Rs 24,109 billion by the end of July 2026. The jump of over Rs 850 billion compared with July 2025 underscores the persistent pressure on the treasury to secure external resources, especially as export earnings have struggled to keep pace with import demand.

Much of the additional borrowing has been channeled into projects aimed at bolstering infrastructure, energy generation and other development priorities that the government deems essential for long‑term growth. At the same time, a sizable portion has been used to meet short‑term balance‑of‑payments needs, such as financing the current‑account deficit and maintaining foreign‑exchange reserves.

The mounting debt burden carries significant implications for the national budget. Debt‑service payments are already accounting for a growing share of fiscal outlays, leaving less room for social spending on health, education and poverty‑alleviation programs. Analysts warn that if the trend continues, the government could face tighter constraints on its ability to implement new initiatives or respond to economic downturns.

Policy makers are therefore under pressure to reverse the upward trajectory. Strategies under discussion include enhancing export competitiveness, attracting stable foreign direct investment, and improving the efficiency of public‑sector borrowing. Managing the cost of debt servicing while preserving growth‑oriented spending will be crucial to stabilising Pakistan’s fiscal outlook in the coming years.