The Ministry of Finance (MoF) has issued a clarification on Pakistan’s external debt profile, responding to recent media claims about high interest rates and payments.
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The statement emphasizes the need for context to understand the true structure of the country’s borrowings.
Clarifying Total vs Public Debt
Pakistan’s total external debt and liabilities stand at $138 billion. This broad figure includes public debt, public sector enterprises’ obligations, bank borrowings, private sector debt, and inter-company liabilities.
The actual External Public (Government) Debt is much lower, at approximately $92 billion.
Concessional Nature and Low Costs
Nearly 75% of the external public debt comes from concessional and long-term sources. These include multilateral institutions (excluding IMF) and bilateral development partners.
Only 7% consists of commercial loans, and another 7% is long-term Eurobonds. The average cost of external public debt is around 4%, far below claims of up to 8%.
Interest Payments Rise Explained
Public external debt interest outflows rose from $1.99 billion in FY2022 to $3.59 billion in FY2025. This marks an 80.4% increase, or $1.60 billion in absolute terms.
The rise stems partly from global interest rate hikes, like US Federal Reserve actions from 2022-2023. Additional inflows came from concessional multilateral sources and the IMF’s Extended Fund Facility.
The government stresses prudent debt management and transparency amid efforts to stabilize the economy.