Pakistan’s total external debt stocks reached $130.847 billion by the end of 2023, up from $127.708 billion at the end of 2022, according to the World Bank’s latest “International Debt Report 2024.” The report highlights the growing debt burden on the country, with China emerging as the largest bilateral lender, providing nearly $29 billion by the end of 2023.
Rising Interest Payments in South Asia
The report noted that South Asia experienced the largest yearly increase in interest payments on public and publicly guaranteed (PPG) debt in 2023, which surged by 62 percent to $12.5 billion. Pakistan made the second-largest interest payments in the region, following significant increases in Bangladesh and India, where interest payments rose by over 90 percent.
For International Development Association (IDA)-eligible countries, interest payments on total debt stock tripled since 2013, reaching a record $34.6 billion in 2023. Pakistan’s interest payments as a share of export earnings stood at 13.6 percent, one of the highest globally, alongside Mozambique (38.3 percent), Senegal (25.9 percent), Kenya (12.8 percent), and Dominica (10.3 percent). This high ratio has further strained Pakistan’s fiscal position.
IMF Repayments and Lending
Pakistan was among the top countries making IMF repurchases in 2023, as repayments by low- and middle-income countries (LMICs), excluding Argentina, more than doubled to $12.2 billion. Egypt, Ukraine, and Pakistan accounted for the largest IMF repurchases. Meanwhile, new IMF lending to LMICs rose by 12.9 percent to $14.8 billion in 2023, though it has stabilized following the extraordinary support provided during the COVID-19 pandemic.
Remittances and Debt Metrics
Pakistan ranked fifth among LMICs in personal remittance inflows, receiving $26.6 billion in 2023. India topped the list with $119.5 billion, followed by Mexico ($66.2 billion), the Philippines ($39.1 billion), and China ($29.1 billion).
The report also highlighted key debt metrics for Pakistan in 2023:
- External debt stocks as a percentage of exports: 352.4 percent (up from 322.1 percent in 2022).
- External debt stocks to GNI: 39.3 percent (up from 34.6 percent in 2022).
- Debt service as a percentage of exports: 43.1 percent (up from 42 percent in 2022).
Composition of External Debt
The World Bank report detailed the composition of Pakistan’s external debt in 2023:
- Long-term external debt: $110.437 billion (up from $107.418 billion in 2022).
- Public and publicly guaranteed debt: $92.990 billion (up from $91.220 billion in 2022).
- Commercial banks and others: $440 million (down from $2.096 billion in 2022).
- Short-term external debt: $8.878 billion (up from $8.768 billion in 2022).
- IMF credit and SDR allocations: $11.532 billion (slightly up from $11.522 billion in 2022).
Public and publicly guaranteed debt by creditor type in 2023 included:
- 46 percent multilateral debt (18 percent World Bank, 15 percent ADB, 13 percent other multilateral lenders).
- 45 percent bilateral debt (22 percent from China, 7 percent from Saudi Arabia, 8 percent from other bilateral sources).
- 9 percent private debt (8 percent bondholders, 8 percent multiple lenders).
Growing Debt Burden
The report underscores Pakistan’s growing debt burden, with external debt stocks rising as a percentage of exports and GNI. The country’s fiscal position remains under pressure due to high interest payments and a significant reliance on external borrowing. The World Bank’s findings highlight the urgent need for fiscal reforms and measures to improve debt sustainability.
