Pakistan’s External Debt Nearly Doubles in a Decade to $135 Billion, World Bank Says

Pakistan’s external debt has almost doubled in ten years, reaching $135.1 billion in 2025, according to the World Bank’s new International Debt Report 2026. The figure, reported on 6 November 2026, shows how much the country now owes to lenders outside its borders — and how expensive that borrowing has become.

External debt is simply money owed to lenders in other countries: foreign governments, international banks, organisations such as the World Bank and the International Monetary Fund (IMF), and private investors who buy a country’s bonds. It is different from domestic debt, which a government owes to lenders inside its own country.

The World Bank’s report puts Pakistan’s total external debt at $135.107 billion at the end of 2025, up from $68.673 billion in 2015. In other words, the amount Pakistan owes the rest of the world has grown by about 97 percent in a decade. The debt also rose by 4 percent in 2025 alone, according to Business Recorder’s report on the same figures.

For ordinary Pakistanis, the number matters because debt has to be repaid — with interest — in foreign currency, mostly US dollars. Every dollar spent on repayments is a dollar that cannot be spent on schools, hospitals, roads or power. And when a country owes a lot abroad, its currency, its prices and its room to handle a crisis all come under pressure.

At a glance

• What happened: The World Bank’s International Debt Report 2026 says Pakistan’s external debt rose from $68.7 billion in 2015 to $135.1 billion in 2025.
• Who Pakistan owes: China is the largest single creditor at $22.4 billion, followed by the World Bank at $19.2 billion and the Asian Development Bank at $16.8 billion.
• What it costs: Loans from official lenders carry an average interest rate of 3.6 percent. Loans from private lenders cost far more — 8.6 percent on average.
• The wider picture: Borrowing by developing countries hit a record $9.4 trillion in 2025, the sharpest rise in four years.
• What happens next: Pakistan is waiting on an IMF decision on about $1.21 billion in new financing, agreed in principle in October 2026.

What the World Bank found

The International Debt Report is the World Bank’s annual survey of what low- and middle-income countries owe to the rest of the world. Its 2026 edition, published this week, tracks borrowing through the end of 2025.

For Pakistan, the headline number is the near-doubling over ten years. But the breakdown of the $135.1 billion is just as important as the total, because different kinds of debt carry very different risks.

The largest part — $107.076 billion — is public and publicly guaranteed debt. That is money borrowed by the government itself, or borrowed by others with a government guarantee behind it. This is the debt that falls directly on the state, and ultimately on taxpayers.

A further $17.58 billion is private non-guaranteed debt: money borrowed by Pakistani companies and banks from foreign lenders without a government guarantee. And $10.45 billion is short-term debt, which must be repaid or rolled over within a year — the kind of borrowing that can cause sudden trouble if lenders lose confidence.

Within the government’s own borrowing, $56.83 billion is owed to multilateral lenders — international organisations such as the World Bank, the IMF and the Asian Development Bank. Another $42.43 billion is owed to bilateral lenders, meaning other governments. The remaining $7.8 billion of public debt is owed to private creditors, such as bondholders and commercial banks.

Who Pakistan owes the money to

Three names dominate Pakistan’s list of creditors. China is the largest single creditor, with $22.4 billion outstanding. The World Bank is next at $19.2 billion, followed by the Asian Development Bank at $16.83 billion.

China’s position reflects a decade of large-scale lending, including for energy and transport projects. The World Bank and the Asian Development Bank, by contrast, lend mainly for development — roads, water, power, schools and health programmes — usually on easier terms than commercial borrowing.

The report also notes that in 2025, China extended the maturities on $2 billion of its loans to Pakistan — in plain terms, it gave Pakistan more time to repay that money. In the same year, the IMF provided $2.3 billion in new disbursements under its Extended Fund Facility and Resilience and Sustainability Facility arrangements, the programmes that support Pakistan’s long-term economic stability.

These two facts sit side by side in the report, and they tell a story in themselves: Pakistan is still borrowing new money from the IMF while asking its biggest bilateral lender for more time to repay old loans.

What the loans cost

Not all debt is equal. The World Bank’s report shows a wide gap between what Pakistan pays to borrow from official lenders and what it pays on private markets.

Loans from official creditors — governments and international organisations — carry an average interest rate of 3.6 percent, with an average repayment period of 16 years and a four-year grace period, during which no principal has to be repaid. Those are manageable terms.

Private credit is a different world. It carries an average interest rate of 8.6 percent, with only a three-year repayment period and a one-year grace period. In other words, private money costs more than twice as much and has to be paid back more than five times as fast.

That gap is not unique to Pakistan. Across the poorest borrowing countries, the report says the average interest rate on new commitments from private creditors reached 8.2 percent in 2025 — the highest since the late 1980s. And the difference between what official and private lenders charge has widened sharply over the past decade, from 3.4 percentage points in 2016 to 5.5 percentage points in 2025.

This is why economists worry when a country’s borrowing shifts from official lenders towards private markets. The money arrives faster, but it is dearer, shorter and harder to reschedule when trouble comes.

Why the debt grew so fast

Pakistan’s debt did not double in a decade by accident. Several forces pushed it up.

First, the government has run budget deficits for years — spending more than it collects in taxes. When a government cannot cover its spending from its own revenue, it borrows. And when domestic borrowing is not enough, or is too expensive, it borrows abroad.

Second, Pakistan has faced repeated shocks that forced emergency borrowing: floods, energy shortages, a pandemic, and a sharp fall in foreign exchange reserves. In 2022 and 2023, the country came close to default — the point where a government cannot pay its foreign debts at all — and was rescued by an IMF programme and emergency support from friendly countries.

Third, some of the increase is an accounting effect rather than new borrowing. The World Bank notes that the US dollar weakened sharply in 2025, and that the weaker dollar accounted for 28.2 percent of the increase in developing countries’ public external debt. When the dollar falls, debts measured in dollars can look larger even if nothing new was borrowed, because loans in other currencies are worth more in dollar terms.

Even allowing for that effect, the trend is clear: Pakistan owes far more abroad than it did ten years ago, and the burden is heavier.

The State Bank of Pakistan’s own figures tell the same story from a slightly different angle. The central bank’s broader measure — total external debt and liabilities, which includes foreign exchange liabilities as well as debt — stood at about $138.9 billion at the end of June 2026.

What it means for ordinary Pakistanis

A national debt figure of $135 billion can feel abstract. But it reaches into everyday life in several concrete ways.

• Repayments eat the budget. Interest and principal payments on foreign debt are paid in dollars, and they come first. Money spent servicing debt cannot be spent on development — on classrooms, clinics, clean water or cheaper electricity. When debt payments grow, governments are left with less for everything else, or they raise taxes to make up the difference.
• It pressures the rupee. To repay foreign loans, Pakistan needs dollars. If dollars are scarce, the rupee weakens, and imports — including fuel, food, machinery and medicines — become more expensive. That feeds into the prices people pay in shops and at petrol stations. Pakistan’s fuel prices were cut again this week, but the link between the exchange rate and the cost of living is a constant one.
• It limits room in a crisis. A country with heavy foreign debts has less freedom to respond when something goes wrong — a flood, a crop failure, a spike in oil prices. Lenders watch debt levels closely, and new borrowing becomes harder and more expensive when existing debts look large.
• It shapes the IMF relationship. Pakistan is now in its 25th lending arrangement with the IMF since joining the institution, and it reached a staff-level agreement with the Fund in October 2026 that could unlock about $1.21 billion in new financing, subject to approval by the IMF’s Executive Board. Each IMF programme comes with conditions — on taxes, energy prices, subsidies and the size of the budget deficit — that directly affect households and businesses. The IMF has also been urging Pakistan to deepen reforms, warning that stability alone will not deliver growth.

None of this means the debt is unmanageable. Much of it is long-term, low-interest borrowing from official lenders, and Pakistan has avoided default. But the direction of travel — up, fast, and increasingly expensive — is the concern the World Bank’s report highlights.

The global picture: a record $9.4 trillion

Pakistan is not alone. The World Bank’s report shows that borrowing by low- and middle-income countries surged in 2025, marking the sharpest increase in external debt in four years and a forceful return of private lenders to developing-country markets.

Total external debt for these countries climbed 5.5 percent to a record $9.4 trillion, as bond issues rebounded, the US dollar weakened, and investors again showed greater willingness to lend. The increase was even faster for the poorest borrowers: debt rose 8.1 percent to $1.3 trillion for countries eligible for the World Bank’s concessional International Development Association financing, and 8.9 percent to $262.4 billion for low-income countries — the biggest increase since 2020.

Debt service payments — interest plus principal — also rose for a fifth consecutive year, increasing 1.9 percent to $1.4 trillion in 2025. Payments to private creditors drove the increase, with payments to bondholders rising 13.7 percent to $363.1 billion.

There was one encouraging turn. Between 2022 and 2025, developing countries paid about $436.1 billion more in debt service than they received in new financing — money flowing out of poor countries to rich lenders. In 2025, that trend reversed: long-term debt flows shifted from a net outflow of $118.4 billion in 2024 to a net inflow of $45.4 billion. Stronger economic growth — developing economies grew by 5.1 percent — helped stabilise some debt ratios.

But the World Bank’s warning is plain: the countries that can least afford it are paying the most to borrow.

The Middle East, North Africa, Afghanistan and Pakistan region, which the Bank groups together, recorded improvements in debt-service and interest ratios. Even so, its external debt-to-national-income ratio rose from 26.7 percent to 29.4 percent in 2025 — the largest single-year increase of any region, and a sign of continued debt accumulation.

What happens next

Three things are worth watching in the months ahead.

First, the IMF’s Executive Board is expected to consider Pakistan’s next financing — the roughly $1.21 billion agreed in principle in October — with a board meeting possible in December, although no date has been confirmed. Approval would release fresh funds and signal continued international backing for Pakistan’s economic programme.

Second, Pakistan’s foreign exchange reserves offer a cushion. The country’s total liquid reserves stood at about $26.9 billion at the end of October 2026, and Saudi Arabia recently extended its $3 billion deposit with Pakistan, deferring repayment and removing an immediate drain on those reserves. That breathing room matters: a country that can pay its bills on time borrows more cheaply than one that cannot.

Third, the real question is whether Pakistan can slow the growth of its debt by raising more revenue at home, exporting more, and borrowing less. The IMF has urged deeper reforms, arguing that stability alone will not deliver growth. Until the economy grows faster than its debts, the numbers in the World Bank’s next report are likely to point in the same direction — up.

For now, the 2026 report gives Pakistan a clear measure of the challenge: a debt stock that has nearly doubled in ten years, owed increasingly on harder terms, in a world where borrowing is getting more expensive for the countries that need it most.

Frequently asked questions

How much external debt does Pakistan have?

According to the World Bank’s International Debt Report 2026, Pakistan’s total external debt was $135.107 billion at the end of 2025, up from $68.673 billion in 2015. The State Bank of Pakistan’s broader measure, which includes foreign exchange liabilities, put total external debt and liabilities at about $138.9 billion at the end of June 2026.

Who is Pakistan’s biggest creditor?

China is Pakistan’s largest single creditor, with $22.4 billion outstanding, followed by the World Bank at $19.2 billion and the Asian Development Bank at $16.83 billion.

What is the difference between external debt and domestic debt?

External debt is money owed to lenders outside the country — foreign governments, international organisations and overseas investors — and it is usually repaid in foreign currency such as US dollars. Domestic debt is owed to lenders inside the country, such as local banks and savers, and is repaid in rupees.

Why does external debt matter for ordinary people?

Debt repayments are made in dollars and take priority in the budget, leaving less money for schools, hospitals and development. Heavy foreign debt can also weaken the rupee, making imports such as fuel and food more expensive, and it limits the government’s room to respond to crises.

Is Pakistan going to default on its debt?

There is no sign of that in the World Bank’s report. Much of Pakistan’s debt is long-term borrowing from official lenders at low interest rates, and the country has an active IMF programme, with about $1.21 billion in new financing agreed in principle in October 2026. The concern is the speed and cost of the debt’s growth, not an imminent default.

Sources

• Dawn, “Country’s external debt nearly doubles in a decade”, 6 November 2026 — https://www.dawn.com/news/2042485
• Business Recorder (via EIN Presswire), “Pakistan’s external debt doubles over a decade: World Bank”, 5 November 2026 — https://intldevelopment.einnews.com/news/z-pakistan/intldevelopment-main
• World Bank, “Developing Countries’ External Debt Surges to Record $9.4 Trillion” (International Debt Report 2026 press release), 5 November 2026 — https://www.worldbank.org/en/news/press-release/2026/11/05/developing-countries-external-debt-surges-to-record-9-4-trillion
• State Bank of Pakistan, “Pakistan’s External Debt and Liabilities — Outstanding” — https://www.sbp.org.pk/assets/document/pakdebt.pdf
• IANS / New Kerala, “Pakistan to lead new developing-country debt platform despite being heavy debtor”, 14 October 2026 — https://www.newkerala.com/news/a/pakistan-lead-new-developingcountry-debt-platform-despite-being-321.htm

This article is for general information and education only. It is not legal or financial advice.