Pakistan Pays $3.23bn Interest on Foreign Debt
ISLAMABAD: Pakistan repaid around $14.44 billion in external loans during 2025-26. The country received $16.16 billion, mostly for budget support, to shore up foreign exchange reserves and strengthen the local currency.
Total External Public Debt Stands at $98.075 Billion
In its annual report on Foreign Economic Assistance (FEA), the Ministry of Economic Affairs (MEA) reported on Wednesday that Pakistan's total external public debt stood at $98.075 billion as of June 30. The country secured fresh commitments of $8.951 billion in FY26.
Debt Servicing and Interest Payments
"As of June 30, 2026, Pakistan's external public debt stood at $98.075bn, while $14.436bn was paid during the year for external public debt servicing, comprising $11.198bn in principal repayments and $3.238bn in interest payments. Net transfers amounted to $4.417bn, indicating an increase in the external public debt stock during the period," the MEA said.
This meant the total public debt increased by around $6.28 billion, or 6.84 percent, compared with $91.795 billion at the close of FY25 ending on June 30, 2025. "The government paid $13.32 billion in 2024-25 on account of debt servicing of external public loans," the MEA had said in its previous report.
Government Misses Disbursement Target
The government missed its $19.923 billion target set in the budget for FY26 by about 19 percent. Total disbursements amounted to $16.16 billion, which is 81 percent of the target.
Breakdown of Disbursements
In FY26, $9.375 billion was obtained for budgetary support and balance of payments to address fiscal imbalances, strengthen foreign exchange reserves, and stabilise the exchange rate.
The total disbursements realised under project financing were recorded at $3.435 billion, followed by programme financing of $1.329 billion and commodity financing of $2.019 billion.
Out of the total disbursements of $9.375 billion for budgetary support and balance of payments, Naya Pakistan Certificates accounted for 33 percent ($3.050 billion), followed closely by time deposits from friendly countries at 32 percent ($3 billion). Foreign commercial banks and bonds jointly contributed 31 percent, while the IMF accounted for 4 percent.
Project Financing Focus Areas
Project financing remained focused on key development sectors. Significant disbursements were directed towards energy and power, environment, climate and resilience, water, transport and communication, education, and other social and economic sectors.
Continued engagement with multilateral and bilateral development partners also supported climate change mitigation and adaptation, resilience building, rehabilitation and reconstruction, and disaster risk reduction, the MEA said.
Debt Composition and Development Partners
Of the total external public debt at $98.075 billion, $59.931 billion was obtained from multilateral and bilateral development partners.
Out of the total agreements of $8.951 billion in new financing agreed in FY26, $3.808 billion, constituting 42 percent of the total commitments, were committed for budgetary support and balance of payments to support fiscal imbalances and stabilise exchange rate.
An amount of $2.768 billion, or 31 percent of the total commitments, was earmarked for project financing. Programme financing of $1.407 billion, or 16 percent of the total commitments, was secured through contributions from Asian Development Bank and World Bank. This was followed by commodity financing of $967 million, or 11 percent, from International Islamic Trade Finance Corporation.
The World Bank, ADB, and IsDB have been the largest contributors among multilateral development partners. They contributed $2.025 billion (40 percent of total multilateral disbursement), $1.772 billion (35 percent of total multilateral disbursement), and $1.087 billion (22 percent of total multilateral disbursement) respectively.
On the bilateral side, Saudi Arabia emerged as the largest contributor during the year, disbursing $1.013 billion, followed by China with $501 million.
Of the new $8.95 billion commitments, $6.809 billion were for federal projects and programmes, and $2.142 billion for provincial projects or programmes.
Published in Dawn, November 12th, 2026
