The Ministry of Finance has responded to recent commentary about Pakistan’s external debt and rising interest payments, saying that headline figures need proper context to reflect the true structure of the country’s liabilities.
In an official statement, the ministry said Pakistan’s total external debt and liabilities stand at 138 billion dollars. However, this figure includes public and publicly guaranteed debt, state-owned enterprise obligations, bank borrowings, private-sector external debt, and intercompany liabilities. It clarified that this total should not be confused with external public debt, which is around 92 billion dollars.
According to the ministry, nearly 75 percent of the government’s external public debt consists of concessional and long-term loans from multilateral institutions, excluding the International Monetary Fund, as well as bilateral development partners. Commercial loans make up about 7 percent, while another 7 percent relates to long-term Eurobonds.
The ministry also shared details of recent debt servicing payments. Pakistan paid 1.50 billion dollars to the IMF, including 580 million dollars in interest. Payments on Naya Pakistan Certificates totaled 1.56 billion dollars, with 94 million dollars in interest. The Asian Development Bank received 1.54 billion dollars, including 615 million dollars in interest, while the World Bank was paid 1.25 billion dollars, of which 419 million dollars was interest. External commercial loan repayments were close to 3 billion dollars, including 327 million dollars in interest.
Officials said rising interest payments are not only due to an increase in total debt. While external debt has increased slightly since fiscal year 2022, much of the new borrowing came from concessional multilateral sources and under the IMF’s Extended Fund Facility program aimed at stabilizing the economy.
The ministry noted that Pakistan faced serious balance-of-payments challenges in 2022-23, when foreign exchange reserves dropped to less than one month of import cover. To manage the crisis, the government entered an IMF program and secured financial support from multilateral and other concessional lenders to stabilize reserves and strengthen the external position.
It also highlighted global monetary tightening as a major reason for higher interest costs. The US Federal Reserve raised its benchmark interest rate sharply between 2022 and 2023 in response to high inflation. Although rates have since eased to around 3.75 percent, they remain significantly higher than 2022 levels, keeping international borrowing costs elevated for countries like Pakistan.
