Pakistan repays USD 500M on Eurobond as liquidity improves

Pakistan has successfully repaid $500 million on an international bond (Eurobond) due on September 30 in line with its debt obligations.

The bond, issued in 2015 to global investors with a 10-year tenor, matured on September 30.

Officials say timely debt servicing hints at “business as usual”, reflecting the country’s commitment to financial discipline. The repayment of debt obligations indicates improvement in external finances and liquidity.

Another sign of economic stability is the upgraded sovereign ratings and improving investor confidence, with Pakistan’s bonds trading at a premium in recent history.

Meanwhile, the debt-to-GDP ratio has improved from 77% in fiscal year 2020 to 70% in fiscal year 2025. The external debt’s share in total public debt — which is repaid in US dollars — has declined from 38% to 32% in FY25, reducing the strain on foreign exchange reserves.

With easing global borrowing costs and stronger economic fundamentals, Pakistan hopes to access debt markets on more competitive terms and continue building a more sustainable debt profile, officials said.

In FY25, Pakistan’s external debt servicing — the principal and interest paid on loans — increased by 6.6% as compared to the previous fiscal year, according to the State Bank of Pakistan (SBP) data.

The total debt servicing in FY25 stood at USD 18.05 billion, up by USD 1.1 billion from USD 16.93 billion in FY24.

The government repaid USD 13.71 billion in principal and interest on public debt in FY25, as compared to USD 13.5 billion in FY24. The amount included USD 11.21 billion as government debt, USD 2.1 billion was repaid to the IMF, and USD 0.39 billion as foreign exchange liabilities in FY25.

Meanwhile, Pakistan’s government debt jumped by 13% in the FY25, which ended on June 30, reaching PKR 77.89 trillion, up from PKR 68.91 trillion a year earlier, according to data released by the SBP.

The increase was driven largely by a sharp rise in domestic borrowing, which surged 15.5% to PKR 54.47 trillion. Meanwhile, external debt rose 7.6% to PKR 23.42 trillion, the central bank reported.