Pakistan Records Historic Sukuk Issuance and Debt Market Growth in FY2026
Pakistan's debt market has seen significant growth in FY2026, with record Sukuk issuance, improved debt indicators, and plans to introduce blockchain-based government debt instruments.
Intelligence analysis by Llama
The federal government and the Pakistan Stock Exchange (PSX) have declared FY2026 a landmark year for Pakistan's debt market, highlighting record Sukuk issuance, stronger capital market financing, improved debt indicators, and plans to introduce blockchain-based government debt instruments.
Imagine Pakistan's debt market is like a big garden. In FY2026, the garden grew a lot, with more people investing and the government making smart decisions to manage the debt. This is good news because it means the country's economy is getting stronger.
Analysis
A $60B Vote of Confidence
Pakistan's debt market has seen a significant surge in FY2026, with the federal government and the Pakistan Stock Exchange (PSX) declaring it a landmark year. The growth is attributed to record Sukuk issuance, stronger capital market financing, improved debt indicators, and plans to introduce blockchain-based government debt instruments. The developments were shared during a joint investor briefing organized by the PSX in collaboration with the Ministry of Finance, where officials outlined the country's debt management strategy and fiscal reforms.
The PSX Managing Director and CEO, Farrukh H. Sabzwari, said the government has raised Rs. 6.4 trillion through the capital market. He added that the average daily traded volume increased to Rs. 3.9 billion during FY2026, up from Rs. 2 billion a year earlier, while participation in the secondary market continued to expand. Finance Ministry Advisor Khurram Shehzad said Pakistan's debt-to-GDP ratio improved from 75.2% in 2023 to 68.5%, while the government retired Rs. 4.7 trillion in expensive debt over the past two years, including Rs. 2.2 trillion during FY2026. He also noted that debt growth slowed to 5%, the lowest level in 15 years, while the share of government revenue spent on debt servicing declined from 61% to 40%.
Advisor on Debt Omer Khan said Pakistan has increased the average maturity of its debt portfolio from 2.6 years to 3.9 years over the past three years. He added that Roshan Digital Account inflows are averaging around $300 million per month, while Pakistan has re-entered international capital markets through Eurobond and Panda bond issuances. Khan further announced plans to introduce tokenized sovereign debt, making Pakistan among the few countries exploring blockchain technology for government borrowing. He added that external debt repayments totaled $1.8 billion during FY2026, while liability management operations reached Rs. 2.923 trillion, a 62.7% year-on-year increase.
Meanwhile, Director of Domestic Debt Khaliq Uz Zaman said gross Sukuk issuance reached a record Rs. 3 trillion during FY2026, the highest ever in a single fiscal year. He added that the government plans to launch its first short-term Sukuk program worth Rs. 400–500 billion in three- and six-month tenors to broaden the investor base and further develop Pakistan's domestic debt market.
Key points
- Pakistan's debt market has seen significant growth in FY2026, with record Sukuk issuance and improved debt indicators.
- The government has raised Rs. 6.4 trillion through the capital market, with the average daily traded volume increasing to Rs. 3.9 billion.
- Pakistan's debt-to-GDP ratio has improved from 75.2% in 2023 to 68.5%, while debt growth has slowed to 5%.
- The government plans to introduce blockchain-based government debt instruments and launch a short-term Sukuk program to broaden the investor base.
If this development continues, Pakistan's debt market could become even more stable and efficient, attracting more investors and helping the country's economy grow even faster.
However, if the government's debt management strategy is not effective, the country's debt burden could increase, leading to economic instability and potential financial crises.
