The Ministry of Finance has issued a detailed clarification regarding Pakistan’s reported $138 billion external debt, stating that the figure includes multiple categories of liabilities beyond direct government borrowing.
According to the ministry, the widely cited $138 billion amount covers public sector enterprises, commercial bank obligations, and private sector borrowings in addition to sovereign debt. Officials stressed that the federal government’s own external debt stands closer to $92 billion.
What Makes Up the $138 Billion Figure
The clarification comes amid public debate over the country’s rising debt burden. The ministry explained that the total external debt and liabilities figure combines:
- Government external borrowing
- State-owned enterprise debt
- Central bank liabilities
- Private sector external loans
- Commercial bank borrowings
Officials noted that aggregating all external obligations into a single headline number can create confusion about the actual fiscal exposure of the federal government.
The statement emphasized that sovereign external debt, the amount directly owed by the government, is significantly lower than the overall $138 billion total being circulated in public discussions.
Cost of Borrowing and Interest Payments
The ministry further stated that the average interest cost on external public debt is approximately 4 percent. It argued that recent increases in interest outflows are largely linked to global monetary tightening and higher benchmark interest rates rather than unchecked borrowing alone.
With global rates rising over the past two years, countries with external obligations have faced increased servicing costs. Officials said Pakistan is not an exception to this broader trend.
The Government of Pakistan maintains that its external financing strategy focuses on concessional loans and multilateral support to manage repayment pressures while stabilizing foreign exchange reserves.
Why the Clarification Matters
Debt transparency has become a critical issue as Pakistan navigates fiscal consolidation, IMF programs, and external financing requirements. Analysts say a clearer breakdown helps separate sovereign liabilities from private and semi-autonomous institutional debt.
Understanding this distinction is essential for evaluating fiscal sustainability, debt-to-GDP ratios, and repayment capacity. Conflating public and private external obligations can distort perceptions of financial risk.
Economic observers note that while the clarification provides context, Pakistan still faces significant debt servicing challenges in the coming years, especially as large repayments and rollovers remain due.
Outlook and Debt Management Strategy
The Finance Ministry reiterated its commitment to prudent borrowing, improving revenue collection, and extending debt maturities to reduce short-term repayment pressure.
Officials said ongoing engagement with multilateral lenders and friendly countries remains part of the broader external financing framework. Debt management reforms and fiscal discipline measures are expected to remain central to economic policy in the near term.
As Pakistan works to stabilize its economy, transparent communication around debt figures will likely remain a key element of public financial governance.
