International Monetary Fund (IMF) has projected a slight increase in Pakistan’s net government debt, estimating it to reach 65.7% of GDP in 2026 compared to 65.3% in 2025. The forecast was shared in the IMF’s newly released Fiscal Monitor: Spending Smarter report, which provides an updated global fiscal outlook and country-specific projections.
According to the report, Pakistan’s gross government debt is expected to decline marginally from 71.6% of GDP in 2025 to 71.3% in 2026. This modest easing of gross debt levels reflects improved fiscal consolidation measures and efforts to manage financing costs more effectively.
The IMF anticipates that government expenditure as a share of GDP will decline to 20.4% in 2026, down from 21.1% in 2025. At the same time, revenue collection is projected to strengthen, rising to 16.2% of GDP in 2026 compared with 15.7% in 2025 and 12.7% in 2024. This trend indicates gradual improvement in the country’s fiscal space, supported by enhanced revenue mobilization and spending rationalization.
The report also projects an improvement in Pakistan’s fiscal balance indicators. The primary balance is expected to reach 2.5% of GDP in 2026, slightly up from 2.4% in 2025, while the overall government balance is projected at -4.1% in 2026, improving from -5.3% a year earlier. These projections suggest a gradual narrowing of the fiscal deficit, which could support debt stabilization over the medium term.
Further details highlight that Pakistan’s debt-to-average maturity is estimated at 14.2% of GDP in 2025, while the interest rate–growth differential from 2025 to 2030 is projected at -1.2%. Non-resident holdings of general government debt are expected to stand at 28.6% of the total in 2024, reflecting the growing role of external investors in the government securities market.
The IMF’s fiscal outlook underscores the importance of sustained fiscal discipline, improved tax compliance, and prudent debt management to ensure macroeconomic stability. While the slight rise in net government debt reflects ongoing financing needs, the projected improvement in revenue and reduction in expenditure point toward a more balanced fiscal path.
Economic analysts view the projections as a signal of cautious optimism, suggesting that Pakistan’s fiscal strategy is slowly gaining traction. However, they also emphasize that maintaining this momentum will require consistent reforms, credible policy implementation, and a stable macroeconomic environment to avoid slippages.
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