China has emerged as Pakistan’s largest creditor, with 22% or $28.8 billion of the country’s total external debt, according to the World Bank’s International Debt Report.
Saudi Arabia was the second-largest bilateral lender to Pakistan with $9.16 billion, or 7% of the total debt. On the bilateral side, the World Bank’s share in Pakistan’s external debt stood at 18% and the Asian Development Bank at 15%.
The report highlights that Pakistan’s total external debt, including loans from the International Monetary Fund (IMF), reached $130.85 billion in 2023. This figure accounts for 352% of the country’s total exports and 39% of its gross national income (GNI). The report also indicates a significant strain on Pakistan’s fiscal position, with external debt servicing reaching 43% of exports and 5% of GNI.
As of 2023, 45% of Pakistan’s external debt was owed to bilateral lenders, while 46% was owed to multilaterals. The remaining 9% of the debt is from private lenders, primarily bondholders.
The report also noted that Pakistan’s long-term external debt stock was $110.44 billion, with $11.53 billion owed to the IMF and $8.88 billion in short-term external debt.
In 2023, Pakistan received $12.95 billion in disbursements, while its debt repayments amounted to $14 billion, including $4.33 billion in interest payments.
The World Bank also highlighted the global increase in debt servicing costs, noting that developing countries collectively spent $1.4 trillion in 2023 to service their foreign debt, with interest costs climbing to a 20-year high.
Among low- and middle-income countries, Pakistan’s interest payments stood at 43% of its exports, surpassing the global average and indicating a severely strained fiscal position.
South Asia experienced the largest increase in interest payments on public debt, with Pakistan making the second-largest interest payments in the region. The report pointed out that rising interest rates and tightening fiscal space have put many countries, including Pakistan, in weak fiscal positions, exacerbating the challenges of managing debt.
The report also mentioned that Pakistan, along with Egypt and Ukraine, had significantly increased its repurchases from the IMF in 2023. On the remittance front, Pakistan ranked fifth globally, receiving $26.6 billion in personal remittances during the year.
