Pakistan’s External Debt Surpasses $138 Billion
Pakistan’s total debt and liabilities have exceeded $138 billion, according to official documents released by the Economic Affairs Division, highlighting mounting financial pressures on the country’s economy.
The documents reveal that interest payments on Pakistan’s external loans have surged by 84 percent over the past three years. During this period, the total volume of interest payments climbed to $3.59 billion, reflecting the growing cost of borrowing amid global financial tightening and domestic fiscal challenges.
Compared to 2022, interest payments increased by $1.67 billion last year alone, underscoring a sharp escalation in debt servicing obligations. The payments were made to several major international creditors, including the International Monetary Fund, the World Bank, and the Asian Development Bank, as well as various commercial banks.
The report further notes that Saudi Arabia and China also received interest payments on safe deposit arrangements provided to Pakistan as part of financial support measures.
According to the Economic Affairs Division, Pakistan spent $13.32 billion annually on debt servicing, including both principal repayments and interest. Despite ongoing repayments, the country’s net external debt increased by $1.71 billion over the past year.
Over the last three years, Pakistan repaid a total of $9.73 billion in external debt principal. However, new borrowing has continued to add to the overall debt burden. The documents indicate that Pakistan signed agreements for $10.64 billion in new loans during the previous fiscal year.
The rising cost of servicing external debt reflects both higher global interest rates and Pakistan’s reliance on multilateral and bilateral financing to manage fiscal deficits and stabilize foreign exchange reserves.
Economic analysts note that the sharp increase in interest payments reduces fiscal space for development spending and social programs, placing additional strain on public finances. Managing external liabilities while sustaining economic growth remains a central challenge for policymakers.
The latest figures underscore the importance of structural reforms, export growth, and fiscal consolidation efforts aimed at reducing reliance on external borrowing. As Pakistan navigates complex economic conditions, debt sustainability and prudent financial management remain critical priorities for ensuring long-term stability.
