By our Correspondent
ISLAMABAD: The Ministry of Finance on Sunday dismissed reports suggesting Pakistan was paying interest of up to 8% on its external loans. Officials said such claims required context to provide an accurate picture of the country’s external debt profile.
The clarification followed recent press commentary on Pakistan’s debt position and interest obligations. “The overall average cost of external public debt is approximately 4%, reflecting the predominantly concessional nature of the borrowing portfolio,” the ministry said in a statement.
Pakistan’s total external debt and liabilities currently stand at $138 billion, the ministry said. This figure includes public and publicly guaranteed debt, obligations of public sector enterprises, bank borrowings, private-sector external debt, and intercompany liabilities to direct investors.
The ministry stressed the importance of distinguishing this aggregate figure from external public debt, which totals around $92 billion. Nearly 75% of this debt comes from concessional and long-term financing provided by multilateral institutions, excluding the International Monetary Fund, and bilateral development partners.
“Only about 7% of this debt consists of commercial loans, while another 7% relates to long-term Eurobonds,” the ministry added. “In light of this composition, the claim that Pakistan is paying interest on external loans ‘up to 8%’ is misleading.”
Interest payments on public external debt increased from $1.99 billion in the fiscal year 2022 to $3.59 billion in 2025, representing a rise of 80.4%, not 84% as reported. In absolute terms, payments rose by $1.60 billion, not $1.67 billion, the ministry clarified. Citing the State Bank of Pakistan, the ministry provided a breakdown of debt servicing.
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