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With $11bn due to lenders and $12bn parked as foreign deposits, Islamabad races against time to manage repayments and avoid default.
RNN Report
Islamabad — Pakistan is bracing for another financially turbulent year, with over $23 billion in external debt repayments due in the fiscal year 2025-26. The daunting figure is a stark reminder of the country’s mounting reliance on external borrowing, and its continued vulnerability to global financial shocks and domestic instability.
According to official documents, approximately $11 billion is earmarked for repayments to multilateral and bilateral creditors, commercial banks, and international bondholders. The rest—around $12 billion—comprises foreign deposits parked by friendly countries such as China, Saudi Arabia, UAE, Qatar, and Kuwait. The government is banking on rolling over these deposits, a temporary reprieve that underscores the fragility of Pakistan’s external account.
Two Eurobond maturities loom large: a $500 million bond due in September 2025 (issued in 2015 at 8.25%) and another $1 billion maturing in April 2026 (issued in 2021 at 6%). Combined with interest, these repayments amount to $1.7 billion. Commercial loan obligations total $2.3 billion, while dues to multilateral lenders—including the World Bank, ADB, and IsDB—exceed $2.8 billion. Repayments to bilateral lenders will cost another $1.8 billion.
Amidst this repayment pressure, the debt-to-GDP ratio is expected to worsen, driven by slowing nominal GDP growth and lower inflation, both of which dampen the government’s fiscal space. While the Ministry of Finance is exploring options such as Panda bonds to raise external financing, high global interest rates and domestic political uncertainty are making such ventures unattractive, if not unviable.
This dependency on rollovers from “friendly” nations and the absence of long-term reforms present a worrying picture. With $100 billion in debt repayments looming over the next four years, the room for missteps is shrinking fast.
Pakistan’s debt story is no longer just about numbers—it is about economic sovereignty, lost choices, and the pressing need for structural reform. Without a clear and credible path to fiscal discipline and external account stability, the threat of a deeper crisis remains ever-present.
