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ISLAMABAD: The International Monetary Fund (IMF) has projected that Pakistan’s external debt will rise to $126.731 billion in 2025-26, up from an estimated $123.338 billion in 2024-25. According to the Fund’s latest report on Pakistan, the external debt is expected to climb further to $131.688 billion by 2026-27.
While the external debt-to-GDP ratio is projected to decline to 30.3% in 2024-25 from 32.2% in 2023-24, it is expected to inch up again to 30.8% in 2025-26, signaling continued debt accumulation.
The IMF also forecasts Pakistan’s domestic debt to surge to Rs60.861 trillion in 2025-26 and Rs65.629 trillion in 2026-27, compared to a projected Rs54.567 trillion in 2024-25.
Despite ongoing fiscal consolidation and efforts to extend domestic debt maturities, the IMF warns that near-term sovereign stress risks remain high, driven by Pakistan’s large gross financing needs and its historical difficulties in securing external financing.
The report underscores that debt sustainability remains vulnerable. Elevated gross financing needs—though slightly reduced since the EFF request—continue to pose serious risks, especially due to weak fiscal and reserve buffers.
The IMF stresses that timely disbursement of committed bilateral and multilateral support is critical in the coming months. Additional risk factors include persistently high interest rates, economic stagnation under tight macro policies, renewed exchange rate pressures, potential policy reversals, and contingent liabilities tied to state-owned enterprises (SOEs).
