Islamabad / Washington – November 7: Underscoring an escalating sovereign debt trap and acute dependence on foreign bailouts, Pakistan’s total external debt nearly doubled over the past decade, surging from $68.67 billion in 2015 to a record $135.1 billion in 2025, according to the World Bank’s latest International Debt Report 2026.
The exhaustive multi-year economic audit reveals that public and publicly guaranteed commitments comprise the lion’s share of the debt pile at $107.08 billion, followed by $17.58 billion in private non-guaranteed debt and $10.45 billion in precarious short-term commercial liabilities. Multilateral lending institutions hold $56.83 billion of the public obligations, while bilateral sovereign creditors account for $42.43 billion, and private capital creditors hold $7.8 billion.
China has firmly cemented its position as Pakistan’s single largest individual creditor, with outstanding loan exposure standing at $22.4 billion. Multilateral institutions follow closely, with the World Bank holding $19.2 billion in credit exposure and the Asian Development Bank (ADB) carrying $16.83 billion in liabilities.
The report highlighted stark disparities in borrowing conditions. While official concessionary loans from multilateral and bilateral development partners carry an average maturity of 16 years, a four-year grace cushion, and a weighted average interest rate of 3.6 percent, private commercial debt carries punitive terms—bearing an average interest rate of 8.6 percent, a steep three-year repayment horizon, and a solitary one-year grace period.
Amid severe foreign exchange liquidity crunches, Beijing granted temporary balance-of-payments relief in 2025 by extending maturities on $2 billion in maturing loans. Simultaneously, the International Monetary Fund (IMF) disbursed $2.3 billion under its Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) frameworks to prevent sovereign default.
Across the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) economic grouping, Pakistan’s external debt as a proportion of Gross National Income (GNI) jumped from 26.7 percent to 29.4 percent in 2025—representing the sharpest single-year deterioration among all developing regional blocs monitored by the World Bank. Globally, external debt across low- and middle-income nations climbed 5.5 percent to an all-time high of $9.4 trillion, exposing developing economies to crushing debt-servicing overheads.
Published by True Roots Media