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Introduction
Pakistan’s central bank has announced that the country will repay $30.35 billion in foreign debt and interest between August 2024 and July 2025. This includes significant loans that bilateral creditors roll over every year, adding pressure on the nation’s finances.
Breakdown of Debt and Interest Payments
The State Bank of Pakistan (SBP) reports that it needs $26.48 billion to cover maturing foreign debt and an additional $3.86 billion for interest payments. The total of $30.35 billion is much higher than the $21.2 billion paid in the previous 12 months. The increase comes from new loans secured in mid-2023 from Saudi Arabia, the UAE, and the IMF.
Between November 2024 and July 2025, Pakistan will be paying back an average of $3 billion each month, with the bulk of payments due in June and July.
IMF Support and Reduced Financing Needs
Despite the rising debt, Pakistan’s repayment obligations are backed by the $7 billion IMF Extended Fund Facility (EFF). Additionally, IMF data shows the country’s gross external financing requirement has fallen to a nine-year low of $18.8 billion for FY25, which is a positive shift.
Future Debt Management Strategies
To meet its financial needs, Pakistan plans to secure funds from several sources. These include $2 billion in Foreign Direct Investment (FDI), $4 billion in IMF loans, and additional debt through Eurobond and Sukuk issuance. New loans from the World Bank and the Asian Development Bank (ADB) are also expected to help bridge the gap.
If Pakistan’s credit rating improves, borrowing terms may become more favorable, further easing the financial pressure.
Reducing Foreign Debt: The Path Forward
Pakistan’s foreign debt is now 20.2% of its GDP, down from 27.6% last year. The government has implemented measures to limit the current account deficit by restricting imports and aligning them with export earnings and remittances. This strategy aims to stabilize the debt burden and ensure future repayments.
Conclusion
Pakistan’s growing foreign debt poses a significant challenge, but with strategic steps like limiting imports, attracting foreign investment, and securing international loans, the country can manage its financial obligations. The road ahead will require careful planning and execution to ensure long-term economic stability.
