Pakistan’s debt growth falls to 20-year low, external debt hits 9-year low

Khurram Schehzad's latest social media post puts Pakistan's debt growth at 7.7 per cent for FY26, the weakest pace in two decades. Mettis Global reported that this compares with a two-decade average of about 16 per cent. The debt-to-GDP ratio eased to 68.3 per cent, down from 75 per cent in FY23 and peaks of 86 to 88 per cent during FY19 to FY21.

External debt fell to 21.5 per cent of GDP, a nine-year low, compared with about 31 per cent during FY19 to FY21. State Bank of Pakistan foreign exchange reserves now stand at $18.4bn, up from $2.9bn in mid-FY23, a rise of more than sixfold. Import cover rose from roughly 2.4 weeks to close to three months, while foreign debt now makes up about 31 per cent of public debt.

Interest expense dropped from about Rs8.9 trillion to Rs6.9 trillion, a saving of close to Rs2 trillion over the year. Pakistan re-entered global bond markets after a four-year gap, issuing a Eurobond and a Panda Bond. The Panda issue drew strong demand and was reportedly about five times oversubscribed. An S&P upgrade to B, with stable prospects, marks the agency's best rating on Pakistan in roughly nine years.