Pakistan faces $23 billion in external debt servicing this fiscal year

Islamabad: Pakistan will have to pay over $23 billion in external debt during the current fiscal year, which began on July 1, according to a media report.

Pakistan's total debt was Rs 76.01 trillion at the end of March this year, comprising domestic debt of Rs 51.52 trillion (approx $180 billion) and external debt of Rs 24.49 trillion ($87.4 billion), according to the Pakistan Economic Survey 2024-25.

The $87.4 billion external public debt consists of two components: government external debt and debt obtained from the International Monetary Fund (IMF).

The News reported that out of the total $23 billion in external debt servicing in 2025-26, there are temporary deposits of $12 billion by friendly countries, with the expectation of securing a rollover from them.

Temporary deposits include $5 billion from Saudi Arabia, $4 billion from China, $2 billion from the UAE and about $1 billion from Qatar.

However, the country will still have to repay around $11 billion in external debt servicing to multilateral, bilateral creditors, international bondholders, and commercial lenders in the current fiscal year.

The situation can worsen if friendly countries refuse to grant rollovers on their deposits, which would make it compulsory for the government to make payments.

Some of the major payments during the current fiscal include two bond repayments of $1.7 billion, commercial loans of $2.3 billion, multilateral creditors’ repayment of $2.8 billion from the World Bank, the Asian Development Bank, the Islamic Development Bank, and the Asian Infrastructure Investment Bank and bilateral loans repayment of $1.8 billion.

It shows that, despite claims of an economic turnaround by the current government led by Prime Minister Shehbaz Sharif, the country is mired in local and external debts that it needs to pay annually.

Currently, the debt payment is the single largest expenditure of the annual budget. Pakistan allocated Rs 8.2 trillion for domestic and external debt servicing in 2025-26, which is 46.7 per cent of the total federal budget of Rs 17.573 trillion.