Pakistan's Central Bank Announces $30 Billion Foreign Debt Repayment in FY25

A third researcher said Pakistan also needs to cut its external expenditure through import substitution. (Photo: X @dailystar)

3 minutes reading Last update: October 14, 2024 | 12:39 p.m. STI

Pakistan’s central bank said the country is scheduled to repay a total of $30.35 billion in outstanding external debt and interest payments this financial year, even as external debt repayments and interest payments increase every year that passes, a media report said on Monday.

Payments over the 12 months from August 2024 to July 2025 include the significant loans that bilateral lenders roll over every year, the Express Tribune reported citing a JS Global report, which in turn cited data from the State Bank of Pakistan (SBP). .

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The report showed that Pakistan must repay overdue external debt worth US$26.48 billion and pay another US$3.86 billion on account of interest expenses during the period.

Pakistan’s repayments and interest payments are fully guaranteed by the IMF’s latest $7 billion Extended Fund Facility (EFF) over the 37-month loan period.

In terms of the debt-to-GDP ratio, however, external debt fell to 20.2 percent in August 2024, from 27.6 percent in the same month last year, as the country’s economy expanded in FY24 compared to the contraction in FY23.

The data, however, highlights that external debt repayments and interest payments are increasing with each passing year, emphasizing that government economic managers, planners and parliamentarians must find ways to increase external revenues and cut external expenditures. .

The most recent data suggests that the sum of US$30 billion is notably high compared to the US$21.2 billion (including extensions) that the country paid in the last 12 months (August 2023 to July 2024), according to research firm JS Global.

The jump in the sum of repayments and interest payments for the current 12 months was recorded after Saudi Arabia, the United Arab Emirates and the IMF granted new loans worth around US$4 billion at the end of June and July 2023 and the IMF lent another $2 billion between August 2023 and April 2024, increasing repayment pressure (including significant extensions) in the coming years.

Citing the latest IMF documents, Topline Research, however, reported that the country’s gross external financing needs fell to a 9-year low of $18.8 billion (excluding expected refinancings and contained current account deficit ) for the current fiscal year (July 2024 to June). 2025).

However, Pakistan is also estimated to accumulate new foreign loans worth $3-4 billion in the current fiscal year (FY25), another researcher said.

A third researcher said Pakistan also needs to cut its external expenditure through import substitution. Such solutions would help improve the country’s ability to make external payments and increase foreign exchange reserves, according to The Express Tribune report.

(Only the title and image of this report may have been reworked by the Business Standard team; the rest of the content is automatically generated from a distributed feed.)

First published: October 14, 2024 | 12:39 p.m. STI