Pakistan’s External Debt Pressured by Declining US Dollar
Islamabad: Pakistan’s external debt servicing burden is rising amid growing risks linked to the weakening of the US dollar against other major global currencies.
Pakistan’s external debt stock comprises 56 percent multilateral and bilateral loans out of a total debt of approximately $92 billion. In recent years, the country’s total external debt and liabilities have hovered around $130 billion, largely due to the relative strength of the US dollar against other currencies such as the euro, Japanese yen, and British pound.
However, in recent days, the US dollar has begun to depreciate, raising concerns that if the current currency trend persists, Pakistan’s debt-to-GDP ratio could increase sharply during the ongoing quarter.
According to the Ministry of Finance, as outlined in the Debt Policy Statement presented to parliament, Pakistan’s external debt rose by six percent on a year-on-year basis to $91.8 billion by the end of June 2025, reflecting an increase of about $5 billion.
The ministry further noted that during the first quarter of fiscal year 2026, external debt recorded a marginal decline of 0.4 percent, equivalent to $0.35 billion.
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