The Ministry of Finance pushed back against recent commentary on the country’s external debt and rising interest payments, saying headline figures require additional context to reflect the structure of its liabilities accurately.
In a statement, the ministry said Pakistan’s total external debt and liabilities stand at $138 billion, but the figure includes public and publicly guaranteed debt, obligations of state-owned enterprises, bank borrowings, private-sector external debt and intercompany liabilities.
It said this aggregate amount should be distinguished from external public (government) debt, which totals about $92 billion.
Nearly 75% of that public external debt consists of concessional and long-term financing from multilateral institutions, excluding the International Monetary Fund, and bilateral development partners, according to the ministry. Commercial loans account for roughly 7%, while another 7% is linked to long-term Eurobonds.
Debt servicing payments during the referenced period included $1.50 billion to the International Monetary Fund, of which $580 million was interest. Payments on Naya Pakistan Certificates totaled $1.56 billion, including $94 million in interest. The Asian Development Bank received $1.54 billion, including $615 million in interest, while the World Bank was paid $1.25 billion, of which $419 million represented interest. External commercial loan repayments amounted to nearly $3 billion, including $327 million in interest.
The ministry said rising interest payments cannot be attributed solely to an increase in debt stock. While overall external debt has edged up since fiscal year 2022, additional inflows largely came from concessional multilateral sources and the IMF’s Extended Fund Facility under the current support program.
Pakistan faced acute balance-of-payments pressures in 2022-23, with foreign exchange reserves falling below one month of import cover. The government subsequently entered an IMF program and mobilized financing from multilateral and other concessional partners to stabilize reserves and shore up its external position.
The ministry also pointed to global monetary tightening as a key factor behind higher borrowing costs. The US Federal Reserve raised its benchmark rate from 0.75% to 1.00% in May 2022 and to 5.25%- 5.50% by July 2023 amid surging inflation. Although rates have since eased to around 3.75%, they remain well above 2022 levels, keeping international financing costs elevated.
QARZAY ka itna bought loads diya hay kay hamari aanay wali naslain bhi nahi utaar sakain ghi.