By Farooq Awan

The Pakistani government has reaffirmed its commitment to a prudent debt management strategy aimed at reducing refinancing risks, lowering debt-servicing costs and diversifying financing sources to support long-term fiscal sustainability.

According to the Finance Division's Monthly Economic Update & Outlook (July 2026), the government is pursuing a proactive debt management approach focused on maintaining orderly access to both domestic and international capital markets while improving the overall structure of public debt.

The report states that, as part of this strategy, the government has appointed consortiums of leading international banks for a three-year period to support future issuances of Eurobonds, international Sukuk, and Pakistani rupee-denominated, US dollar-settled bonds. The move is intended to diversify financing options and ensure regular access to international capital markets.

According to the document, efforts to strengthen debt management have been accompanied by measures to broaden the domestic investor base. During the year, the government launched the InvestPak digital platform, allowing individual and corporate investors to invest in government securities through a web portal and mobile application. It also enabled eligible retail investors to purchase three-month Treasury bills through the JazzCash application with a minimum investment of Rs5,000.

The Finance Division notes that enhanced debt management has driven better fiscal outcomes during FY2025-26. The fiscal deficit narrowed to 3.7% of GDP during July-March, down from 5.6% in the corresponding period of the previous fiscal year, while the primary surplus increased to 3.0% of GDP from 1.5%. The report also highlights a 10.5% decline in mark-up payments, reflecting lower interest rates and improved management of public debt.

According to the report, stronger fiscal performance has reinforced Pakistan's macroeconomic stability alongside easing inflation, higher foreign exchange reserves and improved investor confidence. These developments have created a more favourable environment for implementing long-term debt management reforms.

The document also notes that Pakistan's improving fiscal position has received international recognition. S&P Global Ratings upgraded the country's long-term sovereign credit rating from B- to B, citing stronger fiscal performance, continued implementation of reforms, improved institutional capacity and the rebuilding of foreign exchange reserves.

The report adds that maintaining prudent debt management will remain a key component of the government's economic strategy during FY2026-27. By broadening financing sources, expanding the domestic investor base and reducing refinancing risks, the authorities aim to strengthen fiscal sustainability while supporting continued macroeconomic stability despite external uncertainties.

Credit: INP-WealthPk