ISLAMABAD: Pakistan’s Finance Ministry has reported a significant slowdown in the country’s debt growth, saying the rate of increase fell to its lowest level in two decades during fiscal year 2025-26. According to the ministry, Pakistan’s debt increased by only 7.7 per cent during 2025-26, compared with an average annual growth rate of around 16 per cent over the past 20 years. The ministry said the country’s debt-to-GDP ratio also improved, falling to 68.3 per cent from 75 per cent in fiscal year 2022-23. Between 2019 and 2021, the ratio had remained between 86 and 88 per cent. Pakistan’s external debt-to-GDP ratio also declined to 21.5 per cent, which the ministry described as the lowest level in nine years. The country’s foreign exchange reserves have meanwhile increased substantially, rising from $2.9 billion to $18.4 billion, according to the ministry. The Finance Ministry said Pakistan also repaid Rs4.72 trillion in debt ahead of schedule. It added that annual interest expenditure on government debt declined by nearly Rs2 trillion. The burden of interest payments on government revenue also fell sharply, from 61 per cent to 35 per cent, indicating an improvement in the government’s fiscal position. The ministry further said Pakistan has recorded a primary budget surplus for three consecutive years, reflecting continued efforts to strengthen fiscal management and control expenditure. Pakistan has also returned to international capital markets after a four-year gap. The country’s Panda Bond reportedly attracted demand nearly five times higher than the amount offered, indicating strong investor interest. The ministry also highlighted Pakistan’s improved credit outlook. S&P Global Ratings has maintained Pakistan’s rating at B with a stable outlook, with the ministry describing the current rating as the agency’s highest level for Pakistan in nearly nine years.

Global oil prices continued their sharp upward trend on Friday as escalating conflict in the Gulf region raised fresh concerns about energy supplies and the outlook for the world economy. The sustained rise in crude prices has increased fears of renewed inflation, unsettled financial markets and strengthened expectations that central banks may keep interest rates higher for a longer period. Brent crude was trading at around $100 per barrel after briefly crossing $102, its highest level in nearly two months. Oil prices have climbed by almost 40% during the month, driven by growing concerns that the conflict could disrupt major shipping routes used for transporting crude oil. The latest increase comes as military tensions involving the United States, Iran and the Iran-backed Houthi movement continue to intensify. Attacks on commercial vessels in the Red Sea have heightened concerns about the safety of one of the world’s busiest maritime trade routes. At the same time, uncertainty surrounding shipping through the Strait of Hormuz has added to worries over global oil supplies. Analysts say the combination of risks to both the Red Sea and the Strait of Hormuz has significantly increased market uncertainty. Any prolonged disruption in these waterways could reduce oil exports from the Middle East and place additional pressure on global energy markets. The rise in crude prices has also revived concerns about inflation. Higher oil prices generally increase transportation, manufacturing and production costs, which can eventually lead to higher prices for goods and services. Economists warn that this could slow progress in reducing inflation across many countries. Global financial markets reacted cautiously to the latest developments. Major Asian stock markets recorded notable losses as investors worried about the combined impact of geopolitical tensions, rising energy costs and uncertainty over future economic growth. Investors increasingly shifted towards safer assets amid concerns that market volatility could continue. The outlook for monetary policy has also changed. Financial markets now expect that major central banks, including the US Federal Reserve, could delay planned interest rate cuts or even consider further rate increases if higher energy prices continue to fuel inflation.