Dollar Slide Puts Pakistan Debt Under Fresh Pressure
Pakistan dollar debt faces new pressure as the US dollar shows signs of weakness. This shift could raise external liabilities when measured in local currency terms. According to recent reports, Pakistan holds nearly $92 billion in external debt.
Multilateral and bilateral lenders make up about 56 percent of this total.
However, currency changes can quickly alter the real burden. As a result, debt ratios may rise even without fresh borrowing.
Why Currency Shifts Matter
In recent years, Pakistan’s external obligations hovered near $130 billion. This increase largely reflected a strong dollar against global currencies. For example, the euro, yen, and pound weakened for long periods.
Therefore, Pakistan’s repayment costs rose when converted into dollars.
Now, the trend appears to be reversing. The US dollar has softened against major currencies in recent days. As a result, analysts warn of short-term volatility in debt indicators. If trends continue, the debt to GDP ratio may jump this quarter.
Official Debt Figures Offer Mixed Signals
The Ministry of Finance recently shared updated figures. These numbers appear in the upcoming Debt Policy Statement. External debt rose by six percent year-on-year by end June 2025. It reached $91.8 billion, reflecting a $5 billion increase.
However, the first quarter of FY26 showed mild improvement. Debt declined by 0.4 percent to $91.4 billion by September 2025. This easing offered brief relief. Still, risks linked to exchange rates remain significant.
Multilateral Loans Drive Recent Increase
Most recent debt growth came from multilateral development partners. These include institutions such as the IMF and other lenders. Their lending rose by 8.7 percent, nearly $4 billion. In addition, commercial bank borrowing added $1.6 billion.
A large share came from a $1 billion facility. This loan used an Asian Development Bank policy guarantee. Therefore, while borrowing slowed overall, exposure persists. Pakistan must now manage repayments amid shifting currency markets.
