Pakistan's External Debt Nears $135.1 Billion as Costlier Loans Add Repayment Pressure

A $66.4 Billion Increase in a Decade

Pakistan's external debt reached $135.107 billion at the end of 2025, up from $68.673 billion in 2015, according to figures attributed to the World Bank's International Debt Report 2026. The increase of about $66.4 billion, or 96.7%, leaves the country owing almost twice as much to overseas creditors as it did a decade earlier.

The latest annual increase was smaller: debt rose about 4% from approximately $129.9 billion in 2024. Pakistan's immediate challenge lies in the terms of its borrowing as well as its size. New commitments from private creditors carried an average interest rate of 8.6%, compared with 3.6% for official financing, and came with much shorter repayment periods.

Debt payments also absorbed the equivalent of 33% of Pakistan's export earnings in 2025. That measure puts the repayment burden alongside a major source of foreign currency, the money needed to pay overseas lenders and purchase imports.

China extended repayment deadlines on about $2 billion in loans during 2025, while the International Monetary Fund disbursed $2.3 billion under two financing arrangements. Those steps gave Pakistan more time or additional funding as it managed its external obligations.

Pakistan's experience fits a wider pattern. External debt across low and middle income countries reached a record $9.4 trillion in 2025, while annual principal and interest payments climbed to $1.4 trillion. International lenders were more willing to provide money, but access remained expensive, particularly for countries with limited financial resources.

External debt means money owed by residents, businesses or public bodies to creditors outside the country. The total therefore includes government obligations alongside borrowing by private companies.

Who Owes the Money?

Public and publicly guaranteed debt accounted for $107.076 billion of Pakistan's external obligations in the detailed breakdown. Publicly guaranteed borrowing means the government has promised to repay a loan if the original borrower cannot do so.

Private debt without a government guarantee amounted to $17.58 billion, while short term obligations stood at about $10.451 billion. These three categories together make up the reported $135.107 billion total.

Public and guaranteed obligations represented approximately 79% of the total, calculated from $107.076 billion divided by $135.107 billion. Private debt without a guarantee accounted for about 13%, and short term obligations about 8%.

A separate reported figure puts long term public sector and publicly guaranteed loans at about $92.9 billion. The detailed breakdown gives $107.076 billion for public and publicly guaranteed debt; the reason for the difference in coverage is not specified.

The Pakistan country table in the World Bank's International Debt Report 2025 provides a separate reference for 2024. Its Summary External Debt Data table, expressed in millions of US dollars, lists total external debt stocks of $129.718 billion, long term external debt stocks of $107.788 billion and a series labelled "Public and publicly guaranteed debt from:" of $89.556 billion. The report's tables draw principally on the World Bank International Debt Statistics database, based on country submissions through its Debtor Reporting System. These 2024 entries do not identify the source table or series for the article's 2025 Pakistan figures.

Under the Debtor Reporting System, long term public and publicly guaranteed external debt covers borrowing by public agencies and private borrowing guaranteed by a public agency in the debtor country. Those records are maintained loan by loan, while private nonguaranteed borrowing is reported in aggregate. Total external debt stocks also include private nonguaranteed long term debt, use of IMF credit and special drawing rights allocations, and short term external debt. The supplied report material does not define the separate $92.9 billion figure or establish its coverage, so it does not resolve the difference with the $107.076 billion breakdown.

The decade's main reference points show how the balance accumulated:

• 2015: External debt stood at $68.673 billion.
• 2024: External debt reached approximately $129.9 billion.
• 2025: External debt rose about 4% to $135.107 billion.
• During 2025: China extended maturities on about $2 billion in loans, and the IMF provided $2.3 billion in new disbursements.

China Leads a Broad Group of Creditors

Multilateral institutions, which are backed by groups of member countries, held $56.832 billion of Pakistan's public and publicly guaranteed external debt. Bilateral creditors, meaning individual foreign governments and their lending bodies, held $42.439 billion. Private creditors held another $7.805 billion.

China was Pakistan's largest individual creditor, with outstanding claims of $22.419 billion. The World Bank, including its International Development Association financing, accounted for $19.214 billion, while the Asian Development Bank held $16.830 billion.

Other bilateral creditors were listed with $11.850 billion in claims. Together, the multilateral and bilateral categories accounted for about 93% of public and publicly guaranteed external debt, using $99.271 billion in official claims against the $107.076 billion total.

That concentration makes official financing central to Pakistan's repayment management. Decisions by governments and international institutions about new lending, repayment schedules and loan terms affect most of the country's public external obligations.

Why Private Borrowing Costs More

New official creditor commitments to Pakistan in 2025 had an average maturity of 16 years, a grace period of four years and an average interest rate of 3.6%. Maturity is the time until final repayment; a grace period generally allows the borrower to delay principal repayments under the loan's terms.

New private creditor commitments carried an average interest rate of 8.6%, an average maturity of three years and a grace period of one year. The interest rate gap was five percentage points, while the final repayment deadline was, on average, 13 years earlier.

For a simple illustration, applying those rates to an unchanged balance of $1 billion for one year would produce $36 million in interest at 3.6%, compared with $86 million at 8.6%. Actual payments depend on each agreement's repayment schedule, fees and other terms.

Shorter maturities create another pressure: the borrower must find money sooner to repay the principal or arrange a replacement loan. Replacing a maturing loan with another is called refinancing. If lenders demand higher rates when that happens, future debt payments can rise even without a large increase in the amount borrowed.

Exports Show the Scale of the Burden

Pakistan's external debt equalled 324% of annual export earnings in 2025. In simpler terms, the outstanding debt was about 3.24 times the value of a year's exports. Its external debt was also equivalent to 34% of gross national income, a measure of income earned by the country's residents and businesses.

Debt service, the principal and interest actually paid during the year, equalled 33% of exports and 3% of gross national income. For every $100 in export earnings, the country made external debt payments equivalent to about $33.

For comparison, the Pakistan Snapshot 2024 table in International Debt Report 2025 puts external debt service at 40% of exports and 4% of gross national income. It lists external debt stocks at 315% of exports and 36% of gross national income. These are Pakistan-specific ratios for 2024, not the underlying data for the 2025 ratios stated above.

Export earnings matter because they bring in foreign currency. A larger export base can make overseas obligations easier to manage, while a heavy repayment schedule competes for foreign currency needed for imports and other international payments.

The Middle East, North Africa, Afghanistan and Pakistan region recorded improvements in debt service and interest ratios. Yet its external debt relative to gross national income rose from 26.7% to 29.4%, an increase of 2.7 percentage points and the largest annual rise among the regions covered.

What the China and IMF Support Changed

China extended maturities on agreements covering approximately $2 billion due in 2025. Moving a repayment deadline gives the borrower more time to obtain the funds needed to settle the obligation. Pakistan still has to meet payments under the revised schedule.

The IMF provided $2.3 billion in new disbursements through its Extended Fund Facility and Resilience and Sustainability Facility arrangements. The financing supported Pakistan's efforts to achieve lasting economic stability and growth.

The two measures worked in different ways. China's extensions shifted repayment timing, while IMF disbursements supplied additional financing. Both helped Pakistan manage its external funding needs during the year, alongside its continuing repayment obligations.

Developing Countries Borrowed More as Markets Reopened

External debt across low and middle income countries increased 5.5% to $9.4 trillion in 2025, the fastest rise in four years. Renewed bond issuance, greater investor willingness to lend and a weaker US dollar all contributed to the increase.

Debt owed to private creditors rose 5.2% to about $5 trillion, compared with growth of just 0.6% in 2024. Within that category, debt owed to bondholders increased 5.7% to about $2.4 trillion, while obligations to commercial banks and other private creditors rose 4.7% to about $2.7 trillion.

Bonds allow governments or companies to borrow from investors by promising interest payments and repayment on an agreed date. Renewed access to that market gave borrowers another source of funding, although high interest rates made the money costly.

Gross national income across low and middle income economies grew 5.1%. Stronger income growth helped support some debt ratios and encouraged lending, even as the amount owed continued to increase.

The weaker dollar also raised the dollar value of debt denominated in other currencies. Currency changes accounted for 28.2% of the increase in external public and publicly guaranteed debt across these economies. A loan denominated in another currency can appear larger when expressed in dollars even while the borrower continues making repayments.

The Poorest Borrowers Faced the Highest Rates

Countries eligible for financing from the World Bank's International Development Association, which provides concessional support to poorer economies, saw external debt rise 8.1% to $1.3 trillion. That increase exceeded the 5.5% growth recorded across low and middle income countries.

Low income countries recorded an even faster increase of 8.9%, taking their external debt to $262.4 billion. It was their largest annual increase since 2020.

IDA eligible countries faced an average interest rate of 8.2% on new commitments, the highest since the late 1980s. The gap between their official and private borrowing rates widened from 3.4 percentage points in 2016 to 5.5 percentage points in 2025.

Borrowers from the International Bank for Reconstruction and Development experienced different conditions. Their average interest rate on new commitments fell to 5.5%, from 5.8% a year earlier.

The contrast shows how uneven the return of lending was. Countries with access to more affordable financing could borrow on improved terms, while poorer borrowers faced higher costs. The World Bank warned that rising debt and borrowing costs could restrict resources for infrastructure, education, health and other development investment.

More Financing Arrived, but Payments Kept Rising

Low and middle income countries paid $1.4 trillion in principal and interest in 2025, up 1.9% and the fifth consecutive annual increase. Payments to bondholders rose much faster, increasing 13.7% to $363.1 billion.

Between 2022 and 2025, these economies paid approximately $436.1 billion more in debt service than they received in new financing. That cumulative outflow reduced the financing left after meeting external debt payments.

Long term debt transfers turned positive in 2025. After a net outflow of $118.4 billion in 2024, countries recorded a net inflow of $45.4 billion, meaning new long term financing exceeded related principal and interest payments for the year.

Pakistan's debt figures capture the same tension between access to financing and the cost of repayment. Official creditors hold most public external obligations, and repayment extensions provide time. Private borrowing offers another funding channel, but its higher rates and shorter maturities bring payments closer and make them more expensive.

Key Points

• Pakistan's external debt rose from $68.673 billion in 2015 to $135.107 billion in 2025, an increase of about 96.7%.
• The latest annual increase was about 4%, from approximately $129.9 billion in 2024.
• Public and publicly guaranteed debt accounted for $107.076 billion in the detailed breakdown.
• China was the largest individual creditor, followed by the World Bank and Asian Development Bank.
• New private financing carried an average interest rate of 8.6%, compared with 3.6% for official commitments.
• Pakistan's external debt service equalled 33% of export earnings in 2025.
• China extended maturities on about $2 billion in loans, while the IMF disbursed $2.3 billion.
• External debt across low and middle income countries reached $9.4 trillion, with annual debt service of $1.4 trillion.