Pakistan’s external debt has climbed to $135.1 billion, nearly doubling over the last decade. With China as the largest bilateral creditor, the country faces rising fiscal pressure due to the high cost of private debt and short-term repayment obligations.
Pakistan’s external financial obligations reached $135.1 billion by the end of 2025, marking a 97% increase from the $68.67 billion recorded in 2015. This sustained growth in borrowing reflects the country's reliance on foreign capital to manage ongoing fiscal deficits. Public and publicly guaranteed debt constitutes the largest portion of this load, standing at $107.07 billion, while private non-guaranteed debt and short-term obligations make up the rest.
Debt Structure and Key Creditors
China remains the single largest bilateral creditor, holding $22.42 billion in outstanding loans. While multilateral institutions like the World Bank and the Asian Development Bank collectively hold larger shares—with $19.21 billion and $16.83 billion respectively—China's individual influence on Pakistan’s balance sheet remains significant.
The Cost of Borrowing
The structure of this debt poses a growing challenge for the national treasury. Official loans from institutions and governments are relatively cheaper, with an average interest rate of 3.6% and a 16-year maturity cycle. In contrast, private creditors command an average interest rate of 8.6% with a much shorter three-year maturity cycle. This disparity creates a volatile environment for debt servicing, as the more expensive private debt requires faster repayment, putting immediate pressure on foreign exchange reserves.
Recent Relief and Economic Outlook
To manage liquidity, financial authorities have engaged with international partners. Recently, Beijing extended the maturity of $2 billion in loans that were previously due for repayment in 2025. Additionally, the International Monetary Fund provided a $2.3 billion disbursement under its Extended Fund Facility to support stability. Despite these measures, the country continues to rely on external borrowing to maintain its fiscal operations. Market participants and analysts may continue to track debt servicing schedules, the success of ongoing IMF programs, and the country's ability to manage its short-term debt repayments to avoid liquidity shortages.