The government says the debt burden is getting easier.

The federal government thinks that Pakistan’s debt sustainability would keep getting better over the next three years. They think that the debt-to-GDP ratio will drop from 70.8% to 60.8% within the IMF framework.

A new assessment from the finance ministry says that Pakistan’s debt forecast for the medium term, from fiscal year 2026 to 2028, is still stable and sustainable.

The research said that by June 2025, the country’s overall public debt has gone up by more than Rs10 trillion over the last year, reaching Rs84 trillion. The amount of debt is expanding, but financing needs are expected to be high, at 18.1% until 2028.

The report also said that Pakistan saved Rs888 billion in interest payments over the past year, which shows that the country is better at managing its money and paying less in interest. But it also talked about some of the problems and hazards that could make debt less stable.

It said that weak economic development is still a big danger to the long-term viability of debt. Changes in interest rates and exchange rates might make the debt load even heavier, and external shocks and the consequences of climate change could make the situation much worse.

The ministry warned that the country’s high number of floating-rate loans has made it vulnerable to changes in interest rates. 67.7% of Pakistan’s total debt is domestic, and 80% of all loans have fluctuating interest rates, which keeps the risk level high.

Short-term loans make about 24% of all borrowing, which keeps the pressure to refinance high. External debt is 32.3% of total liabilities, and most of it is concessional borrowing from bilateral and multilateral partners.

The ministry noted that about 41% of the external loans are also on variable rates, which keeps the risk at a medium level. The study said it was worried about the risks that could come from a growing current account deficit and falling foreign exchange reserves.

However, it also pointed out some good news, saying that budgetary discipline and economic stabilisation might help lessen the burden of public debt.

The government said that improving the IT sector and growing exports would assist stabilise foreign exchange reserves. It also said that more openness in issuing debt and higher investor trust have made debt management better.

Officials said that better debt management has come about because of sustainable growth, technological innovation, and competition. Still, the ministry warned that a drop in income or an increase in spending could have an effect on the primary balance.