Pakistan Needs to Pay Off $100 Billion Debt in Next 4 Years: Minister of State for Finance

The Deputy Finance Minister emphasized that Pakistan must arrange for $100 billion in external financing over the next four years to meet its debt obligations. This includes rolling over $12.7 billion in deposits from countries like China, Saudi Arabia, and the UAE, Minister of State for Finance Ali Pervaiz Malik told the National Assembly Committee on Finance on Thursday.

He said the International Monetary Fund (IMF) has been briefed that Pakistan needs urgent financing of $12 billion by 2027, besides the current $7 billion IMF program. He also stressed that a long-term economic policy is being developed to address the precarious state of the economy. He said reducing the policy rate by just one percent could decrease the loan burden by Rs. 320 billion.

Malik said the $7 billion IMF package aims to stabilize the economy, but Pakistan’s overall financial needs are massive. The country’s external account position remains vulnerable despite the latest IMF program.

Meanwhile, Finance Minister Muhammad Aurangzeb revealed that Pakistan’s financial requirements extend far beyond the current IMF bailout package. He confirmed that $7 billion would come from the IMF, while an additional $5 billion will need to be sourced from commercial banks and other lenders.

The IMF has also been informed about assurances from friendly countries to roll over existing loans. Aurangzeb said these assurances convinced the IMF Executive Board to schedule a meeting to further discuss Pakistan’s program. Additionally, the IMF has been taken into confidence on reforms in Pakistan’s power sector.

Current Economic Position

The meeting was briefed that despite a recent increase in foreign exchange reserves to $9.5 billion, the external account remains fragile. Pakistan’s debt-to-GDP ratio has decreased from 76.6 percent to 67.2 percent over the past five years, but total loans have surged to Rs. 71 trillion, with a 14 percent annual increase on average. Of this debt, 66 percent is domestic and 34 percent external.

The committee was informed that Pakistan faces external payments of $18.83 billion this year, $9.23 billion in 2026, $8.71 billion in 2027, $7.68 billion in 2028, and $6.88 billion in 2029. This does not include the repayment of deposits from friendly countries.

Committee members weren’t happy with the current economic situation, rising oil prices, and the ongoing strain on foreign exchange reserves. Hina Rabbani Khar, a member of the committee, noted that Pakistan’s economy remains in the ICU due to the absence of sustainable economic strategies.