In a detailed statement, the Ministry of Finance clarified that Pakistan is paying around 4 percent on average on its external debt nearly half of what has been circulating in public debate. Officials stressed that most of the country’s borrowing is long-term and concessional, meaning it comes with softer terms and lower interest rates.
Out of the total $138 billion in external debt and liabilities, about $92 billion falls under external public debt. Roughly 75 percent of this amount has been secured from multilateral and bilateral concessional sources, providing some breathing room despite rising global borrowing costs.
Interest payments have nonetheless increased in recent years. In fiscal year 2022, Pakistan paid $1.99 billion in interest on external debt. By fiscal year 2025, this figure rose to $3.59 billion a jump that officials say reflects both higher global rates and a larger debt stock, not reckless borrowing alone.
Among key payments, $1.50 billion was paid to the International Monetary Fund, including $580 million in interest. $1.54 billion went to the Asian Development Bank.
$1.25 billion was repaid to the World Bank. Under the Naya Pakistan Certificates scheme, $1.56 billion was paid, including $94 million in interest. Around $3 billion was repaid in commercial loans, with $327 million in interest.
Why the Pressure Increased
The strain became visible in fiscal year 2022-23, when Pakistan’s foreign exchange reserves dipped to less than one month of imports a red flag for any economy. Stability returned only after support under the IMF’s Extended Fund Facility (EFF) program and fresh multilateral inflows.
Global conditions also played a role. The Federal Reserve raised its benchmark interest rate to 5.25 5.50 percent, tightening global liquidity and pushing up external payment costs for emerging markets like Pakistan.
Not Just the Size, The Structure Matters
Finance officials argue that focusing solely on the headline number misses the bigger picture. The key issue is not just how much Pakistan owes, but on what terms and for how long. Since a major share of debt comes from concessional lenders, the government maintains that the overall structure remains manageable, though far from comfortable.
The statement concluded with a pledge of ‘responsible debt management’ and a commitment to economic stability. Yet, with repayments rising and global rates still elevated, Pakistan’s debt path remains a balancing act steady steps forward, but on a narrow edge.
As the numbers grow heavier, the debate grows louder. The real test now is not only borrowing wisely, but growing fast enough to stay ahead of the bill.
