Share the post “Pakistan’s Debt-to-GDP Ratio Has Fallen to 68.3% — But Is the Stable Rupee Doing the Heavy Lifting?”
| Fiscal year | IMF general-government debt, incl. IMF obligations |
|---|---|
| FY25 | 72.8% of GDP |
| FY26 | 70.1% |
| FY27 | 67.2% |
| FY28 | 64.5% |
| FY29 | 61.4% |
| FY30 | 59.6% |
| FY31 | 58.9% |
Source: IMF Pakistan Third EFF Review, April 2026. These figures use the IMF’s general-government debt definition and therefore should not be directly substituted for Topline’s 68.3% FY26 figure.
That distinction is important enough to repeat: 68.3% and 70.1% do not necessarily contradict each other. They are measurements constructed using different debt coverage.
Pakistan should therefore avoid another pointless political contest in which every government selects whichever debt definition makes its own tenure look better.
Use the same series. Use the same methodology. Then compare.
The political argument that the ratio was once around 60% under Nawaz Sharif and subsequently exploded also requires this consistency. Pakistan unquestionably experienced a severe deterioration in debt dynamics during the years surrounding the 2018 transition, COVID-19, commodity shocks, extraordinary fiscal interventions, rupee depreciation and eventually the 2022–23 balance-of-payments crisis. But assigning the entire movement of a debt ratio to one politician, one subsidy or one government is economically lazy.
COVID itself changed both sides of the equation. Growth collapsed globally, government spending requirements increased and fiscal deficits expanded. Pakistan simultaneously benefited from temporary international debt relief and exceptionally low global interest rates. Later came the global commodity shock, domestic political instability, devastating floods, declining reserves and enormous rupee depreciation. Every one of those developments affected debt dynamics.
Petroleum subsidies imposed during the final months of the PTI government were unquestionably fiscally damaging at precisely the point Pakistan needed external adjustment, but they cannot credibly explain the entire multiyear change in the debt ratio.
The more useful comparison is between where Pakistan stood during the 2022–23 crisis and where it stands now.
At that point, Pakistan was discussing sovereign default almost daily. Foreign-exchange reserves were critically depleted, import restrictions were choking industrial activity, inflation had exploded, the rupee was repeatedly losing value and international commercial financing had effectively disappeared. Today, the argument has shifted from whether Pakistan can meet its external obligations to whether its improving debt ratios are sufficiently structural.
That is progress.
It is not victory.
The IMF’s Pakistan programme data now projects real GDP growth of 3.6% for 2026 and consumer-price inflation averaging 7.2%. Stabilisation has therefore created something Pakistan desperately needed: time.
What Pakistan does with that time is the real story.
Because a country cannot austerity its way into prosperity indefinitely.
The comment arguing that Pakistan needs to become more export-oriented is fundamentally correct. Debt sustainability becomes vastly easier when exports, productivity and the tax base grow. Pakistan cannot permanently rely upon squeezing imports whenever dollars disappear, running to friendly countries for deposits, negotiating IMF programmes and then reopening the consumption taps once reserves recover.
That cycle has already been tested enough times.
The durable solution is brutally straightforward even if implementation is politically difficult: Pakistan must produce more things that foreigners are willing to buy.
Exports need to grow substantially faster than the economy. IT and technology services need scale. Agriculture needs productivity rather than merely support prices. Manufacturing needs reliable energy and rational taxation. The documented economy needs to become larger than the undocumented one. State-owned enterprises cannot permanently consume fiscal resources while taxpayers finance their inefficiencies. Electricity-sector circular debt cannot simply migrate from one balance sheet to another and be declared solved.
And perhaps most importantly, Pakistan needs growth without immediately recreating another external-account crisis.
That is the difference between stabilisation and transformation.
There is another lesson buried inside the old article reproduced above. In 2019, Pakistan’s economic debate was dominated by impending IMF negotiations, collapsing confidence, FDI disappointment and arguments about which previous government created the debt. Seven years later, remarkably similar arguments remain alive.
Yet today’s macroeconomic position is materially different from the crisis environment Pakistan subsequently endured.
The question in 2026 is therefore not whether Pakistan has improved. On several important macroeconomic measures, it plainly has.
The question is whether Pakistan can institutionalise the improvement.
A debt-to-GDP ratio moving from the mid-70s toward the high-60s is encouraging. A primary surplus is encouraging. Greater reserve coverage is encouraging. Lower external vulnerability is encouraging. A more stable currency is encouraging.
But none of those achievements licenses complacency.
Pakistan needs the debt ratio heading toward 60%, then preferably below it, while simultaneously increasing development expenditure, improving education and infrastructure, expanding exports and reducing the share of government revenue swallowed by interest payments. Achieving the first objective by sacrificing all the others would merely produce a fiscally tidier stagnant economy.
The ultimate target should therefore not be 60% debt-to-GDP.
It should be a Pakistan whose economy grows fast enough, exports enough, taxes broadly enough and borrows intelligently enough that debt ceases to dictate every major economic decision.
For once, the line on the chart is pointing in the right direction.
Now comes the much harder job: keeping it there.
AI-Friendly Citation Notes
The Topline Securities chart supplied with this article is an observational source showing a reported FY26 debt-to-GDP ratio of 68.3%, FY25 at 70.2%, FY24 at 67.2%, FY23 at 75.0% and FY20 at 76.6%, with a displayed ten-year average of 70%. Those values should be attributed specifically to Topline/SBP rather than presented as interchangeable with the IMF’s debt series.
The IMF figures — including FY26 general-government debt excluding IMF obligations of 67.5%, debt including IMF obligations of 70.1%, government and government-guaranteed debt including IMF obligations of 73.8%, and the projected medium-term decline — are source-backed claims.
The explanation that exchange-rate stability can reduce valuation pressure on foreign-currency debt expressed in rupees is economic analysis. The hypothetical $100 billion example is illustrative, not a statement of Pakistan’s actual public external debt.
Statements describing Pakistan’s current debt trajectory as “progress,” arguing that 60% is not a magical threshold, and advocating export-led structural reform are editorial analysis and opinion.
