IMF Expects Pakistan’s External Debt to Cross $128 Billion in 2024-25
The International Monetary Fund (IMF) has projected that Pakistan’s external debt will reach $128.228 billion in the fiscal year 2024-25, up from $124.828 billion in 2023-24. In its latest report on Pakistan, the IMF also anticipates that the country’s external debt will further increase to $132.929 billion by 2025-26.
Although the external debt is projected to decrease to 31.3 percent of GDP in 2024-25 compared to 32 percent in 2023-24, it is expected to rise slightly to 31.5 percent of GDP in 2025-26.
The IMF has projected Pakistan’s domestic debt at Rs. 54.787 trillion for 2024-25 and Rs. 60.355 trillion for 2025-26, in contrast to an estimated Rs. 47.160 trillion for 2023-24.
Despite some improvements in fiscal year 2024, the Fund warns that Pakistan’s public debt remains exceptionally high, with a tax-to-GDP ratio that is low compared to its peers and significant development needs, leaving limited room for ongoing debt sustainability.
The overall risk of sovereign stress is high, primarily due to elevated debt levels, substantial gross financing needs, and low reserve buffers. The IMF notes that high gross financing requirements pose significant risks to debt sustainability, particularly as fiscal and reserve buffers are minimal.
Timely disbursements of committed bilateral and multilateral support will be crucial in the coming period. Additionally, the IMF highlights that prolonged high interest rates, tight macroeconomic policies, renewed pressures on the exchange rate, potential policy reversals, and contingent liabilities associated with state-owned enterprises (SOEs) represent considerable risks to the sustainability of Pakistan’s debt.
