Pakistan’s foreign debt nears $135 billion as borrowing costs rise: World Bank

New Delhi: Pakistan’s external debt has grown sharply over the past 10 years, reaching $135.1 billion in 2025, according to the World Bank’s International Debt Report 2026. The figure is nearly double the $68.7 billion recorded in 2015 and marks an increase of about 4 per cent from $129.9 billion in 2024.

The report showed that public and publicly guaranteed debt made up the bulk of Pakistan’s external liabilities at $107.08 billion. Private-sector borrowing without a government guarantee stood at $17.58 billion, while short-term external debt amounted to $10.45 billion.

Multilateral lenders remained the biggest source of official borrowing, holding $56.83 billion in outstanding claims. Bilateral creditors accounted for $42.43 billion.

China continued to be Pakistan’s largest single-country creditor, with outstanding loans of about $22.4 billion. Pakistan also owed around $19.2 billion to the World Bank and $16.83 billion to the Asian Development Bank.

The report also pointed to a growing gap between the cost of borrowing from official and private sources. New loans from official creditors in 2025 carried an average interest rate of 3.6 per cent, with a repayment period of 16 years and a grace period of four years.

In contrast, new private-sector loans carried an average interest rate of 8.6 per cent, with a maturity period of only three years and a grace period of one year.

Pakistan’s external debt stood at 34 per cent of its gross national income in 2025. Debt servicing consumed 33 per cent of the country’s export earnings during the year.

China extended the repayment timeline for nearly $2 billion in loans to Pakistan during 2025, providing the country with additional breathing space. The International Monetary Fund also disbursed $2.3 billion under its Extended Fund Facility and Resilience and Sustainability Facility programmes.

The World Bank warned that external debt pressures were increasing across the wider Middle East, North Africa, Afghanistan and Pakistan region. The region’s external debt-to-GNI ratio rose to 29.4 per cent in 2025 from 26.7 per cent a year earlier, recording the largest annual increase among the World Bank’s regional groupings.