Pakistan’s External Debt Nearly Doubles to $135 Billion in a Decade: World Bank

Pakistan’s external debt has nearly doubled over the past decade, rising from $68.7 billion in 2015 to $135.1 billion in 2025, according to the World Bank’s International Debt Report 2026. The figure represents an increase of approximately 4 percent over the previous year, when the debt stood at $129.9 billion, underscoring the country’s persistently growing reliance on external financing.

Of the total external debt, $107.08 billion consisted of public and publicly guaranteed obligations, while private-sector borrowing without government guarantees accounted for $17.58 billion. Short-term external debt added a further $10.45 billion. Within the public and publicly guaranteed category, multilateral institutions were the largest creditor group at $56.83 billion, followed by bilateral creditors at $42.43 billion.

China remained Pakistan’s largest individual country creditor, with approximately $22.4 billion in outstanding loans. Pakistan also owed about $19.2 billion to the World Bank and $16.83 billion to the Asian Development Bank, reflecting its continued dependence on both international financial institutions and bilateral lending.

The report also drew attention to a sharp divergence in the cost of new borrowing. Financing commitments from official creditors in 2025 carried an average interest rate of 3.6 percent, with a 16-year repayment period and a four-year grace period. By contrast, new private-sector loans carried an average interest rate of 8.6 percent more than double the official rate with an average maturity of just three years and a one-year grace period. The gap highlights the comparatively expensive and short-term nature of private financing available to Pakistan.

Pakistan’s external debt-to-gross national income (GNI) ratio reached 34 percent in 2025, while debt-service payments absorbed 33 percent of its export earnings a level that leaves limited fiscal space for development spending and heightens vulnerability to external shocks. During the year, China extended the maturity of approximately $2 billion in Pakistani loans, providing short-term relief, while the International Monetary Fund disbursed $2.3 billion in new financing under its Extended Fund Facility and Resilience and Sustainability Facility programmes.

The trend was not confined to Pakistan. Across the broader Middle East, North Africa, Afghanistan and Pakistan region, the external debt-to-GNI ratio rose from 26.7 percent to 29.4 percent the largest annual increase among the World Bank’s regional groupings signalling a widening debt burden across the region as a whole.

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