Pakistan govt says external debt stands at $138B, public share is $92B

Pakistan’s total external debt and liabilities stand at $138 billion, but the government says the headline figure includes a wide range of obligations and should not be confused with the country’s external public debt, which amounts to about $92 billion.

In a statement issued Sunday, the Finance Division said the $138 billion figure covers public and publicly guaranteed debt, liabilities of public sector enterprises — both guaranteed and non-guaranteed — bank borrowings, private-sector external debt and intercompany liabilities to direct investors.

By contrast, external public debt, which are obligations owed directly by the government, is approximately $92 billion.

Who is Pakistan indebted to?

Nearly 75% of that amount consists of concessional and long-term financing obtained from multilateral institutions, excluding the International Monetary Fund, and bilateral development partners, the ministry said. About 7% comprises commercial loans and another 7% relates to long-term Eurobonds.

“In light of this composition, the claim that Pakistan is paying interest on external loans ‘up to 8%’ is misleading,” the statement said, adding that the overall average cost of external public debt is around 4%, reflecting the largely concessional nature of the borrowing portfolio.

The ministry said public external debt interest payments rose from $1.99 billion in fiscal year 2022 to $3.59 billion in fiscal year 2025, an increase of 80.4%, not 84% as reported in some accounts. In absolute terms, interest payments increased by $1.60 billion over the period, not $1.67 billion, it said.

According to the State Bank of Pakistan, total debt servicing to major creditors during the period included:

• $1.50 billion paid to the International Monetary Fund, including $580 million in interest.
• $1.56 billion for Naya Pakistan Certificates, including $94 million in interest.
• $1.54 billion to the Asian Development Bank, including $615 million in interest.
• $1.25 billion to the World Bank, including $419 million in interest.
• Nearly $3 billion in repayments on external commercial loans, including $327 million in interest.

While interest payments have risen in absolute terms, the ministry said the increase cannot be attributed solely to a growing debt stock. Although overall debt has edged up since fiscal year 2022, additional inflows have largely come from concessional multilateral sources and the IMF’s Extended Fund Facility under the current support program.

Higher global interest rates

Pakistan faced severe balance-of-payments pressures in 2022-23, when foreign exchange reserves fell below one month of import cover. The government subsequently entered into an IMF Extended Fund Facility arrangement and secured financing from multilateral and other concessional partners, steps it said were critical in rebuilding reserves and stabilizing the external account.

The ministry also cited global interest rate trends as a factor behind higher external interest payments. In response to the inflation surge of 2021-22, the Federal Reserve raised its benchmark rate from 0.75%-1.00% in May 2022 to 5.25%-5.50% by July 2023. Although rates have since moderated to around 3.75%, they remain above 2022 levels, keeping international borrowing costs elevated.

The government said it remains committed to prudent debt management, transparency and strengthening macroeconomic stability, urging stakeholders to consider the broader context of Pakistan’s external debt structure and evolving global financial conditions.