Pakistan Reports $3.23 Billion Interest Payment on External Debt
Total external public debt reached $98.07 billion as the government missed annual financing targets.
1Debt Servicing and Total Stock
Pakistan reported total external public debt at $98.07 billion as of June 30, 2026. During the fiscal year, the government paid $14.44 billion for debt servicing, which included $11.20 billion in principal repayments and $3.24 billion in interest. This resulted in a net debt increase of approximately $6.28 billion over the year.
2Missed Financing Targets
The government secured $16.16 billion in total disbursements during the fiscal year, falling short of its $19.92 billion budget target. This performance represents 81 percent of the projected goal. Consequently, the country relied on these funds primarily to shore up foreign exchange reserves and strengthen the local currency against external pressures.
3Budgetary Support Mechanisms
Budgetary support and balance of payments financing accounted for $9.38 billion of total disbursements. Naya Pakistan Certificates contributed 33 percent of this amount, while time deposits from friendly nations provided 32 percent. Foreign commercial banks and international bonds accounted for 31 percent, with the International Monetary Fund contributing the remaining 4 percent.
4Multilateral Development Contributions
Multilateral partners remain the largest source of external financing for the nation. The World Bank led contributions with $2.03 billion, followed by the Asian Development Bank at $1.77 billion and the Islamic Development Bank at $1.09 billion. These three institutions collectively provided 97 percent of all multilateral disbursements during the fiscal year.
5Bilateral Funding Sources
Bilateral support played a critical role in the country's financial landscape throughout the year. Saudi Arabia emerged as the primary bilateral contributor, disbursing $1.01 billion to support federal and provincial projects. China followed as the second-largest bilateral source, providing $501 million to assist with various development programs and fiscal stabilization efforts.
6Project Financing Allocation
Beyond budgetary support, $3.44 billion was directed toward specific project financing. Key sectors receiving these funds included energy, power, water, and transport infrastructure. Additionally, significant resources were allocated to climate resilience, environmental protection, and disaster risk reduction, reflecting a strategic focus on long-term development goals alongside immediate fiscal stabilization requirements.
7New Financing Commitments
The government secured $8.95 billion in new financing commitments for the fiscal year. Of this total, 42 percent is earmarked for budgetary support, while 31 percent is dedicated to project financing. Federal projects received $6.81 billion of these commitments, with the remaining $2.14 billion allocated to various provincial-level development programs and initiatives.
8Fiscal Sustainability Outlook
The increase in total public debt to $98.07 billion highlights ongoing challenges in managing fiscal imbalances. While debt servicing costs remain substantial, the government continues to rely on multilateral and bilateral partnerships to maintain economic stability. Future fiscal health will depend on balancing these external obligations with sustainable revenue generation and growth.
Original article: Dawn — Pakistan Reports $3.23 Billion Interest Payment on External Debt