Pakistan’s external debt repayment burden is expected to decline sharply in FY27, with total debt servicing projected to fall by $5 billion to $21.5 billion, according to State Bank of Pakistan (SBP) Governor Jameel Ahmad.

Speaking after the Monetary Policy Committee (MPC) meeting, the governor said the country’s external debt servicing requirement will decrease from $26.5 billion in FY26 to $21.5 billion in FY27. Of the total, $3.5 billion will be interest payments, down from $4 billion a year earlier.

He said the remaining $18 billion comprises principal repayments, of which $10-11 billion is expected to be rolled over or refinanced. This would reduce Pakistan’s net external repayments to around $7.5 billion, compared with $11 billion in FY26.

According to the SBP, around $6 billion of the expected rollover requirement has already been secured during July.

The central bank also reaffirmed its target of increasing foreign exchange reserves to $20.2 billion by December 2026. The governor said reserve accumulation will now be the SBP’s primary focus, supported by a sharp reduction in forward liabilities, which have declined to $0.9 billion from $5 billion in June 2022.

He added that the recent decline in reserves was mainly due to a $1.4 billion refinancing payment, which is expected to return within the next few weeks, restoring reserve levels.

On remittances, the SBP expects inflows to reach a record $44 billion in FY27, up from $41.6 billion in FY26, despite concerns that the Middle East conflict could affect overseas workers’ transfers.

The governor also projected an increase in exports during FY27, driven by a recovery in rice exports after their decline in the previous fiscal year.