The Ministry of Finance has pushed back against recent commentary on the nation”s debt, clarifying that while public external debt interest payments surged by over 80 per cent to $3.59 billion between 2022 and 2025, the country”s overall borrowing portfolio remains predominantly long-term and concessional.
In a statement issued to contextualise figures today, the ministry corrected claims that interest outflows had risen by 84 per cent. The official figure stands at an 80.4 per cent increase, representing an absolute rise of $1.60 billion, not the reported $1.67 billion.
The government emphasised the distinction between the country”s total external debt and liabilities of $138 billion and the more specific External Public (Government) Debt, which currently amounts to approximately $92 billion.
According to the clarification, nearly 75 per cent of this public debt is composed of low-cost, long-term financing from multilateral institutions and bilateral development partners. Commercial loans and long-term Eurobonds each account for only about 7 per cent of the portfolio.
In light of this composition, the ministry described assertions of Pakistan paying interest “up to 8 percent” as misleading. It was stated that the overall average cost of the External Public Debt portfolio is approximately 4 per cent, reflecting its highly concessional structure.
The statement attributed the sharp rise in servicing costs primarily to global financial conditions rather than an expansion of high-cost debt. Officials pointed to the aggressive monetary tightening by the U.S. Federal Reserve, which pushed international borrowing costs significantly higher compared to 2022 levels.
It was also noted that recent borrowing, including funds from the IMF”s Extended Fund Facility, was essential to manage acute balance of payments pressures during 2022-23 when the nation’s foreign exchange reserves had fallen below one month of import cover.
State Bank of Pakistan records cited by the ministry show significant servicing payments to key creditors during the period. These included $1.50 billion to the International Monetary Fund (of which $580 million was interest) and $1.54 billion to the Asian Development Bank (including $615 million in interest).
Additionally, payments towards external commercial loans neared $3 billion, with interest accounting for $327 million, while Naya Pakistan Certificates saw total payments of $1.56 billion, which included $94 million in interest.
The Government concluded by reaffirming its commitment to prudent debt management and transparency, encouraging stakeholders to consider the full context of Pakistan’s debt structure and the evolving global financial environment for an informed public discourse.