ISLAMABAD: Pakistan external debt 135 billion dollars is the figure at the centre of a new World Bank report, which says the country external debt has nearly doubled in a decade. The report puts the total at 135.1 billion dollars in 2025, against 68.7 billion dollars in 2015. That is a rise of almost 100 percent in ten years, and it shows how fast the country has borrowed from abroad. The figures were reported by Dawn on 7 November, and they raise fresh questions about how Pakistan will repay what it owes.
Pakistan owed 68.7 billion dollars in 2015, and the total has now nearly doubled to 135.1 billion dollars. The rise did not happen in one year. It built up slowly as governments borrowed to pay for imports, to cover the budget gap and to repay older loans. Each year the interest bill grew, and each year the country needed new loans to keep up with the old ones. That cycle is what economists call a debt trap, and it is the reason the World Bank numbers matter so much.
The largest part of the debt is owed by the government itself. Public debt 107.1 billion dollars is the figure for public and publicly guaranteed debt in the report, which means loans taken by the government or loans the government has promised to repay. That is almost four fifths of the whole external debt. When the government owes this much in foreign currency, every fall in the rupee makes the debt harder to carry, because more rupees are needed to buy the dollars for repayment.
China largest creditor 22.4 billion dollars is named in the report as the biggest single lender to Pakistan. The World Bank and the Asian Development Bank come next among the creditors, though the report does not give their exact shares in the same line. China has lent for power plants, roads and other projects, and those loans now form the largest single block of the external debt. The terms of each loan are different, and some carry higher interest than loans from the World Bank or the Asian Development Bank.
Private debt 17.6 billion dollars makes up the rest of the total, and it covers loans taken by private firms and banks from abroad. These loans are smaller than the government debt, but they still have to be repaid in foreign currency, and they add to the pressure on the country reserves. When private firms borrow abroad, they bring dollars in at first, but the repayments go out later, and that outflow can hit at the worst time.
Short term borrowing 10.45 billion dollars adds to the pressure, because it must be repaid quickly. Short term debt is money borrowed for a year or less, and it has to be rolled over or repaid when it falls due. If lenders refuse to roll it over, the country must find the cash at once. That is why economists watch the short term figure closely, even though it is smaller than the long term debt. A country with a large short term bill is always one bad month away from a cash crunch.
The report lands at a time when Pakistan keeps facing the same balance of payments problem again and again. The country imports more than it exports, and the gap is filled by loans and by remittances from overseas Pakistanis. When imports rise or exports fall, the reserves run down, and the government has to borrow more or turn to the International Monetary Fund. That pattern has repeated for decades, and the World Bank figures show that the borrowing has grown faster than the economy that must repay it.
There is no quick fix for a debt stock of this size. The government can try to raise exports, cut imports and collect more tax, but each of those steps takes years to show results. In the short term, the country must keep its lenders confident, keep the rupee steady and keep the reserves above the danger line. The State Bank has said the external account has improved, with reserves rising and remittances projected at 45 billion dollars this year, but the World Bank report is a reminder that the stock of debt is still growing.
Readers should keep the numbers in mind when they hear talk of new loans and new projects. A loan is not free money, and every billion borrowed today is a bill that falls due tomorrow. The World Bank report does not say Pakistan cannot repay its debt, and it does not predict a default. What it does say is that the debt has nearly doubled in ten years, and that the country must grow faster than its borrowing if the burden is ever to come down. That is the challenge for the years ahead.
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