Pakistan paid more than $3.8 billion in external debt servicing during the third quarter of the current fiscal year (FY25), including $1.263 billion in interest, according to data released by the State Bank of Pakistan (SBP).
The country’s total external debt servicing for FY25 was initially projected at $26 billion, a target that seemed challenging at the outset. However, Pakistan has made significant progress towards meeting this goal, with total payments amounting to $11.466 billion in the first three quarters. This includes $7.47 billion in principal and $3.99 billion in interest.
The highest payment for external debt servicing was made in the second quarter (October-December FY25), totaling $4.176 billion, with $1.39 billion of this figure allocated to interest. The third quarter saw a decrease in the payment amount to $3.813 billion, with $1.263 billion paid as interest.
SBP Governor Jameel Ahmed recently expressed confidence that Pakistan would be able to roll over $12.3 billion in debt while securing necessary financial assurances. The financial sector remains optimistic that Pakistan will meet its external debt servicing targets by the end of FY25.
The SBP is also working to boost foreign exchange reserves, with a revised target of $14 billion for the year, aided by unexpectedly high remittance inflows. The remittance target has been raised from $35 billion to $38 billion for FY25, which would represent a 26% increase compared to the previous year’s $30.2 billion inflows.
In addition to these efforts, the IMF’s recent approval of two major financing arrangements for Pakistan—a $1 billion disbursement under the Extended Fund Facility and a new $1.4 billion Resilience and Sustainability Facility for climate initiatives—should further support the SBP’s reserves.
Despite these positive developments, Pakistan faces challenges on the trade front. Imports have increased, resulting in a widening trade deficit. However, higher remittances and financial support from the IMF and countries like China, Saudi Arabia, and the UAE have provided a cushion against the potential negative impacts.
Pakistan’s export target of $60 billion remains ambitious, with exports reaching $26.86 billion in the first 10 months of FY25, showing a modest growth of 6.25% from the previous year. However, the country’s imports have risen to $48.21 billion, a 7.77% increase compared to the same period last year.
