Cash-strapped Pakistan‘s central bank has revealed the country is scheduled to repay a total of USD 30.35 billion in maturing foreign debt and interest payments in 12 months (August 2024 to July 2025) including those significant loans which bilateral creditors roll over every year.
The State Bank of Pakistan (SBP) data, cited by a JS Global report, showed that the payments from August 2024 to July 2025 include significant loans that bilateral creditors roll over annually.The Express Tribune reported that Pakistan is set to repay maturing foreign debt amounting to USD 26.48 billion and an additional USD 3.86 billion in interest expenses during this period.
Under the latest USD 7 billion IMF Extended Fund Facility (EFF), Pakistan’s repayments and interest payments are fully secured for the 37-month loan period. Despite the rising repayments and interest payments, the foreign debt-to-GDP ratio has decreased from 27.6 per cent in August of the previous year to 20.2 per cent in August 2024, due to the expansion of Pakistan’s economy in FY24 compared to the contraction in FY23.
The data highlights the increasing foreign debt repayments and interest payments each year, emphasizing the need for economic managers, planners, and parliamentarians to explore ways to boost foreign income and reduce external expenditures. Compared to the USD 21.2 billion (including rollovers) paid by Pakistan over the past 12 months (August 2023 to July 2024), the current 12-month period’s repayment and interest payment sum of USD 30 billion is significantly higher, according to JS Global.
The increase in repayments and interest payments for the ongoing 12 months can be attributed to fresh loans provided by Saudi Arabia, UAE, and IMF in late June and July 2023, amounting to around USD 4 billion, as well as an additional USD 2 billion lent by IMF between August 2023 and April 2024. These loans have increased the repayment pressure (including significant rollover) in the coming years.
Topline Research, citing the latest IMF documents, reported that Pakistan’s gross external financing requirement has dropped to a 9-year low of USD 18.8 billion (excluding expected rollovers and contained current account deficit) for the ongoing fiscal year (July 2024 to June 2025). However, another researcher mentioned that Pakistan is also expected to add fresh foreign loans amounting to USD 3 billion to USD 4 billion in the current fiscal year (FY25).
A third researcher emphasized the need for Pakistan to reduce its external expenditures through import substitution. Implementing such measures would help improve the country’s ability to make external payments and increase foreign exchange reserves, as reported by The Express Tribune.