Pakistan is set to repay over $23 billion in external debt servicing in the current fiscal year, according to official sources. This includes deposits amounting to $12 billion from friendly countries, with hopes for a rollover of these funds, according to a news report.
However, the country still faces around $11 billion in external debt servicing, which is due to multilateral, bilateral creditors, international bondholders, and commercial lenders.
The country could face risks of non-repayment if bilateral creditors do not approve rollover requests.
In addition to the $23 billion, Pakistan’s external debt servicing requirement is further impacted by $500 million due for repayment in September 2025 on the maturity of a Eurobond, with an interest rate of 8.25%.
This is one of two major Eurobond repayments that Pakistan faces this fiscal year, with the second bond maturity in April 2026 valued at $1 billion and carrying an interest rate of 6%.
Key repayments for the current fiscal year include:
- $1.7 billion in bond repayment and interest
- $2.3 billion in commercial loans
- $2.8 billion in repayments to multilateral creditors such as the World Bank, ADB, and the Islamic Development Bank
- $1.8 billion in bilateral loans
- $4 billion in SAFE deposits from China
The total public sector external debt for FY2025-26 stands at around $15 billion, with $4 billion from China’s SAFE deposits and $9 billion related to loans from the State Bank of Pakistan (SBP). This also includes loans from the IMF and foreign deposits that do not qualify for budgetary support.
Minister for Finance Muhammad Aurangzeb has been briefed on the Medium Term Debt Strategy (MTDS), which includes a proposal to launch a Panda bond. However, sources indicate that the plan is facing challenges.
The global increase in interest rates and Pakistan’s rising risk premium make the issuance of international bonds like Eurobonds or Sukuk bonds difficult. The possibility of launching these bonds at a rate close to 10% is expected to face resistance, especially given the country’s polarized political environment.
