KARACHI: Pakistan made external debt repayments amounting to over $3.8 billion during the third quarter of the ongoing fiscal year (FY2024–25), according to figures released by the State Bank of Pakistan (SBP).
Of this amount, $1.263 billion was paid in interest, indicating the persistent burden of debt servicing on the national economy.
At the beginning of FY25, Pakistan was faced with an external debt servicing obligation of $26 billion, a figure that initially seemed daunting.
However, with effective management and timely inflows, the government has made considerable progress toward meeting this target.
Data released by the SBP shows that during the first quarter (July–September FY25), Pakistan paid $2.134 billion in principal repayments along with $1.343 billion in interest.
Over the first nine months of the fiscal year (July–March), the cumulative principal repayment stood at $7.47 billion, while interest payments reached $3.99 billion, bringing the total external debt servicing to $11.466 billion.
Second Quarter
The second quarter (October–December FY25) witnessed the highest repayment levels so far, with $4.176 billion paid, including $1.39 billion in interest.
During the third quarter (January–March FY25), a total of $3.813 billion was paid, again with a significant portion—$1.263 billion—being interest on outstanding debt.
SBP Governor Jameel Ahmed recently expressed optimism about managing the country’s external obligations, stating confidence in the successful rollover of $12.3 billion in debt.
Financial analysts have echoed this sentiment, noting that the government appears on track to fulfill its external repayment commitments by the end of the fiscal year.
Alongside these repayments, the State Bank is also targeting an increase in foreign exchange reserves, now aiming to reach $14 billion.
This revision in the reserve target is largely due to stronger-than-expected remittance flows.
Remittance targets for the year have also been revised upward, with the new goal set at $38 billion—an increase of nearly $8 billion, or 26 percent, compared to last fiscal year’s total inflow of $30.2 billion.
If achieved, this would represent a major cushion for the external account and could reduce reliance on external borrowing.
Additionally, the International Monetary Fund (IMF) has approved two major financing arrangements for Pakistan: a $1 billion disbursement under the Extended Fund Facility and another $1.4 billion under the Resilience and Sustainability Facility, aimed at supporting climate resilience and sustainable development.
These measures are expected to further boost the country’s foreign exchange reserves and enhance macroeconomic stability.
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Pakistan’s external account is currently in a more stable position, supported by a current account surplus of $1.8 billion recorded over the first nine months of FY25.
This marks a significant improvement compared to previous fiscal years, where persistent deficits posed a major challenge.
Despite this improvement, other macroeconomic indicators show a mixed picture. Imports have been on the rise, widening the trade deficit once again.
However, robust remittance inflows from overseas Pakistanis, along with continued support from multilateral partners and friendly nations—including China, Saudi Arabia, and the UAE—have helped offset the impact of increasing imports.
Meanwhile, the government’s target of achieving $60 billion in annual exports remains out of reach, largely due to downturns in agriculture and large-scale manufacturing.
These sectors have underperformed, curbing the country’s export potential. As of the first 10 months of FY25 (July–April), total exports stood at $26.86 billion—a modest increase of 6.25 percent compared to $25.28 billion in the same period of the previous year.
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However, imports during this time climbed to $48.21 billion, marking a 7.77 percent rise from $44.90 billion a year earlier.
The resulting trade imbalance remains a significant concern, despite positive movements in other areas of the external account.
