Islamabad, February 22, 2026 – The Ministry of Finance on Sunday issued a detailed clarification on Pakistan’s external debt position and associated interest payments, countering what it described as misleading claims in a recent press commentary.
In its statement, the ministry emphasized the need for proper context to ensure an accurate understanding of the country’s external debt profile, noting that Pakistan’s total external debt and liabilities currently stand at $138 billion. This aggregate figure includes public and publicly guaranteed debt, liabilities of public sector enterprises (both guaranteed and non-guaranteed), bank borrowings, private-sector external debt, and intercompany loans to direct investors.
External Public Debt at $92 Billion
The ministry clarified that External Public (Government) Debt alone amounts to approximately $92 billion, a significantly lower figure than the headline number often cited. Of this total, nearly 75 percent consists of concessional and long-term financing from multilateral institutions (excluding the IMF) and bilateral development partners.
Only around 7 percent of the external public debt portfolio comprises commercial loans, while another 7 percent relates to long-term Eurobonds. Given this structure, the claim that Pakistan is paying interest rates “up to 8 percent” on its external debt is misleading, the ministry said.
According to official estimates, the overall average cost of Pakistan’s external public debt stands at approximately 4 percent, reflecting the predominance of concessional financing.
Interest Payments Rise Explained
The ministry acknowledged that public external debt interest payments increased from $1.99 billion in FY2022 to $3.59 billion in FY2025 — an increase of 80.4 percent, not 84 percent as reported. In absolute terms, interest payments rose by $1.60 billion, rather than $1.67 billion.
Based on data from the State Bank of Pakistan, debt servicing payments during the period included $1.50 billion to the International Monetary Fund (IMF), of which $580 million was interest; $1.56 billion to Naya Pakistan Certificates, including $94 million in interest; $1.54 billion to the Asian Development Bank, with $615 million as interest; and $1.25 billion to the World Bank, including $419 million in interest. Payments on external commercial loans totaled nearly $3 billion, with $327 million representing interest.
Global Rates and IMF Program Impact
The ministry stressed that the rise in interest payments cannot be attributed solely to an increase in the debt stock. Since FY2022, additional borrowing has primarily come from concessional multilateral sources and the IMF’s Extended Fund Facility (EFF) under the ongoing IMF-supported program.
Pakistan entered into the IMF arrangement during 2022–23 amid severe balance of payments pressures that caused foreign exchange reserves to drop below one month of import cover. The program, along with financing from multilateral and bilateral partners, helped stabilize reserves and strengthen the country’s external account.
Officials also pointed to global monetary tightening as a key factor behind higher interest payments. The U.S. Federal Reserve raised interest rates sharply from 0.75–1.00 percent in May 2022 to 5.25–5.50 percent by July 2023 in response to global inflation, significantly increasing international borrowing costs. Although rates have since eased to around 3.75 percent, they remain well above pre-2022 levels.
Commitment to Transparency and Stability
Reaffirming the government’s commitment to prudent debt management and transparency, the ministry urged stakeholders and the public to consider the full context of Pakistan’s external debt structure and global financial conditions.
“Accurate representation of debt statistics is essential for informed public discourse,” the statement said, adding that the government remains focused on strengthening macroeconomic stability and ensuring sustainable debt management going forward.