Pakistan will not face issues in meeting its external payment obligations in the current fiscal year (FY25), stated State Bank of Pakistan (SBP) Governor Jameel Ahmad during a press briefing following the Monetary Policy Committee (MPC) meeting.
The MPC reduced the key policy rate by 100 basis points, bringing it to 19.5%. Addressing queries on loan rollovers and potential debt re-profiling, Ahmad revealed that Pakistan needs to settle $26.2 billion in external debt obligations in FY25, comprising approximately $4 billion in interest payments and over $22 billion in principal repayments.
“The good news is that $3 billion of this debt has already been settled in July, including a $2 billion rollover and a $1.1 billion repayment. Therefore, we need to repay $23 billion over the next 11 months, which includes $3.7 billion in interest payments and over $20 billion in principal repayments,” he explained.
Despite timely payments of its external debt obligations in the previous fiscal year, Pakistan’s external reserves increased from $4.4 billion to $9.4 billion. Ahmad detailed that $12.3 billion of the $26 billion debt payment will be rolled over bilaterally, with another $4 billion in commercial loans also rolled over, leaving a repayable amount of $10 billion, $1.1 billion of which has already been paid off in July.
“Our serviceable debt of nearly $9 billion for the current fiscal year is lower than our current foreign exchange reserves, and additional inflows are expected. Thus, we will not face any issues in debt servicing,” he assured.
As of July 19, SBP’s foreign exchange reserves stood at $9.02 billion, with total liquid foreign reserves at $14.33 billion and net foreign reserves held by commercial banks at $5.31 billion.
Concerns over Pakistan’s external financing needs and debt sustainability have been raised by international ratings agencies and analysts. Pakistan has initiated talks on reprofiling its power sector debt to China, alongside structural reforms suggested by the International Monetary Fund (IMF), Finance Minister Muhammad Aurangzeb announced.
Aurangzeb emphasized that reprofiling, not restructuring, of debt is being discussed, involving an agreed lengthening of repayment time. Talks with Saudi Arabia, the UAE, and China are ongoing to meet gross financing needs under the IMF program, for which Islamabad seeks board-level approval.
