Friendly countries roll over $6bn as SBP projects lower debt servicing for FY27

Pakistan's external debt servicing bill for FY27 is projected to fall by roughly $5 billion to $21.5 billion, State Bank of Pakistan (SBP) Governor Jameel Ahmad said on Monday, crediting an early $6 billion rollover from friendly countries already secured in July 2026 for easing pressure on the country's financing position.

Addressing a press conference, Ahmad broke down the projected FY27 figure, down from $26.5 billion in FY26, into $3.5 billion in interest payments and $18 billion in principal repayments. He attributed the decline to an improved debt profile, lower financing costs, and a shift toward longer-term and multilateral financing arrangements.

Of the $18 billion in principal due, he said $10-11 billion is expected to be rolled over or refinanced, cutting the net repayment requirement to about $7.5 billion, down from $11 billion the previous year. 

With nearly $6 billion of that rollover already arranged, Ahmad said actual cash outflows for FY27 should come in around $7 billion, well below the roughly $11 billion Pakistan paid out in FY26.

He said Pakistan managed its FY26 obligations through a mix of repayments, rollovers from friendly countries, and re-deposits, and expects a similar approach to cover much of FY27's requirements. Commercial borrowing is increasingly being replaced with long-term and multilateral financing, he said, which is reducing refinancing risk and strengthening the country's external debt position.

Pakistan's federal government external debt, which stood at around $82 billion in FY22, has broadly held at that level despite significant repayments in recent years, Ahmad said, though the maturity profile of the debt stock has improved considerably, easing short-term repayment pressure.

He also pointed to a sharp reduction in the SBP's forward liabilities, which fell from $5.8 billion to around $900 million by the end of June 2026 — a shift he said should further strengthen Pakistan's reserve position and allow the central bank to act as a net supplier of foreign exchange liquidity when needed.

Ahmad linked these improvements to recent upgrades in Pakistan's sovereign credit outlook, noting that the country's 10-year international bond yield has fallen to around 7.7%, from nearly 35% previously, reflecting stronger investor confidence.

He added that the government had also secured financing at around 7% through an international bond issuance a few months ago — a rate far lower than what Pakistan faced during periods of economic stress.