Pakistan's Debt
Pakistan's economy is in debt. In the last fiscal year (2024-25), the country borrowed a record $26.7 billion (about Rs 2.23 lakh crore) in foreign debt, reflecting its increasing dependence on external aid. Pakistan's foreign exchange reserves stood at $14.5 billion at the end of June 2025, mostly made up of rollovers of old debt and new borrowings.
How Did Pakistan Use The Loan?
According to the Ministry of Economic Affairs, of the $26.7 billion loan, only $3.4 billion (13%) was used for project financing. The rest of the money was spent on maintaining the budget and foreign exchange reserves, which do not generate income to repay the loan.
Pakistan's Debt-To-GDP Ratio Imbalance
According to the Finance Ministry, Pakistan's debt-to-GDP ratio and gross financing needs are more than 15% of GDP, indicating an imbalance. This situation is expected to persist for the next three years.
Which countries gave Loan To Pakistan?
IMF loaned 2.1 billion dollars.
Saudi Arabia loaned $5 billion in cash deposits at 4% interest, rolled over annually. Also, $200 million in oil financing at 6% interest.
China loaned $4 billion in deposits at over 6% interest and $484 million in guaranteed loans.
UAE and Kuwait: UAE deposited $3 billion. A total of $12.7 billion in rollover loans came from these countries.
Asian Development Bank: New loan of $2.1 billion, which is $500 million more than the budgeted amount.
World Bank: Provided $1.7 billion, which is $300 million less than the agreed amount.
Islamic Development Bank: $716 million loan.
Pakistan's Position In Global Markets
Pakistan's poor credit rating hindered the country from being a part of global capital markets. Last year, plans to borrow $1 billion through Eurobonds and Panda bonds failed. The government and the central bank had no choice but to take expensive commercial loans with ADB guarantees.
Pakistan's Debt
Pakistan's economy is facing huge difficulties in repaying the debt. More than 50% of the debt was used for the rollover of old debts, raising questions about economic stability. People are expressing concern over this situation on social media, some say that the people of the country will have to pay a heavy price to repay this debt.
