Pakistan's $135 Billion Debt Mountain: External Borrowing Nearly Doubles In A Decade

Pakistan's external debt stock nearly doubled to $135.1 billion by the end of 2025 from $68.67 billion a decade earlier, according to the World Bank's International Debt Report 2026. The increase of 96.7% over the 10-year period came as the country's external debt also rose nearly 4% from $129.92 billion in 2024.

The World Bank's country data shows that long-term external debt stood at $110.48 billion in 2025, including $92.9 billion in public and publicly guaranteed borrowing and $17.58 billion in private non-guaranteed debt. Short-term external debt accounted for another $10.45 billion, while IMF credit and Special Drawing Rights (SDR) allocations stood at $14.18 billion. These categories are recorded separately in the World Bank's data.

China was Pakistan's largest individual creditor, with $22.4 billion outstanding, followed by the World Bank at $19.2 billion and the Asian Development Bank at $16.83 billion.

Cost Of Borrowing

The report also highlights the difference in borrowing costs between official and private lenders. According to figures reported by local media, the average interest rate on new private borrowing commitments was 8.6%, compared with 3.6% for official lending. Loans from official creditors had an average maturity of 16 years and a four-year grace period, while private credit had an average repayment period of three years and a one-year grace period. The difference exposes Pakistan to higher financing costs and shorter repayment timelines when it turns to private markets.

Separately, Pakistan's Ministry of Finance reported that the country's external public debt rose to $98.075 billion by June 2026, from $91.795 billion a year earlier, an increase of 6.8%. This is a narrower measure of public external debt and covers a different reporting period from the World Bank's $135.1 billion total external debt stock.

The World Bank's global report said external debt across low- and middle-income countries increased 5.5% to a record $9.4 trillion in 2025, while debt-service payments reached $1.4 trillion. It warned that higher borrowing costs are placing pressure on public finances and limiting resources available for development spending.