Pakistan’s Total Debt in 2025 and the Repayment Plan

Pakistan’s total debt and the repayment plan have become central topics in every economic and political discussion today. As of 1 July 2025, the debt burden has crossed historic thresholds, putting unprecedented pressure on fiscal management, currency stability, and development financing. This article breaks down the actual figures, payment timelines, IMF obligations, bilateral and commercial debt structures, and offers a close look at Pakistan’s proposed strategies to escape the debt trap.

A Snapshot of Pakistan’s Total Debt as of 1 July 2025

According to the Ministry of Finance, Pakistan’s total debt as of 1 July 2025 stands at:

Source: Pakistan Economic Survey 2024-25, State Bank of Pakistan (SBP), IMF Staff Reports.

Pakistan’s debt-to-GDP ratio now hovers around 77.6%, significantly above the sustainable threshold (often cited at 60%) for emerging economies.

Breakdown of External Debt: Who Does Pakistan Owe?

Bilateral Lenders

Multilateral Institutions

Commercial Debt & Eurobonds

• Eurobond/Sukuk: $7.5 billion
• Commercial loans from Chinese, Gulf banks, and Credit Suisse-type consortia: $11.2 billion
• Short-term foreign currency swaps: $4.1 billion

Debt Repayment Obligations: What’s Due in FY 2025-26?

Pakistan needs to arrange at least $25 billion in gross external financing for FY 2025-26, which includes rollovers, interest payments, and currency reserve replenishment.

The Government’s Repayment Strategy

IMF’s SBA Program Extension & New EFF (Expected Q4 2025)

• Pakistan completed the $3 billion Stand-By Arrangement (SBA) in April 2025.
• The government has formally requested a new Extended Fund Facility (EFF) worth $6–8 billion to support medium-term reforms.

Chinese Rollovers and Refinancing

• Pakistan has received verbal assurances from Beijing regarding the rollover of $5 billion in bilateral and commercial Chinese loans, though at higher interest spreads than before.

Eurobond Restructuring

• Islamabad is exploring the possibility of delaying the 2026 maturity of a $1 billion Eurobond by offering higher yield incentives or partial buybacks.

Privatization Revenues

• The government plans to raise $1.5 billion from the sale of stakes in:
  • PIA (ground services & hotel assets)
  • Power Distribution Companies (DISCOs)
  • Roosevelt Hotel (New York)

Diaspora Bonds and Islamic Sukuk

• The issuance of diaspora-focused bonds and Shariah-compliant Sukuk in Gulf markets is expected to raise $2–3 billion over 12 months.

Expert Opinions: Is the Strategy Sufficient?

Dr. Hafeez Pasha (former Finance Minister):

“Pakistan’s total debt and the repayment plan are critically dependent on political stability. The strategy relies heavily on rollovers and optimistic inflows that may not materialize under external shocks.”

Farooq Tirmizi (Naya Daur & Capital Markets Analyst):

“Until Pakistan improves its tax-to-GDP ratio (currently just 9.3%), debt sustainability remains a mirage. One-off privatization cannot cover recurring external liabilities.”

IMF Assessment (2025 Article IV Report):

“Pakistan must build FX reserves to 3 months of imports (~$15 billion) and reduce circular debt in energy to restore confidence.”

Real-World Impact: How Debt is Affecting Common People

• Currency Depreciation: PKR lost 18.5% value against USD from July 2024 to July 2025 due to debt-driven import payments.
• Inflation: Annual CPI inflation stands at 19.1%, driven by rising fuel and food prices due to external funding constraints.
• Energy Surcharge: Circular debt in energy has led to additional Rs. 7/unit surcharges on electricity bills.

The Sovereign Risk Factor: What Rating Agencies Are Saying

Pakistan’s sovereign rating reflects the tight liquidity and high near-term repayment pressure.

Global Comparison: How Does Pakistan’s Debt Situation Compare?

To place Pakistan’s total debt and the repayment plan in context, here’s a snapshot comparing it with other countries in the region:

Insight: While Pakistan’s debt levels are high, they are not the highest regionally. The core issue is low revenue collection, import dependency, and shallow reserves, which amplify sovereign risk.

Reforms Required for Long-Term Sustainability

Tax Reforms

• Broaden the tax base: Less than 3.5 million Pakistanis file tax returns out of a population of 241 million.
• Digitize the FBR system.
• Implement agriculture and retail sector taxation.

Energy Sector Fix

• Circular debt in the power sector crossed Rs. 2.7 trillion in 2025.
• Improve billing efficiency, reduce line losses, and privatize underperforming DISCOs.

Export Diversification

• 65% of Pakistan’s exports are textile-based.
• Expand to pharmaceuticals, IT, and agri-value chains with policy-backed incentives.

Debt Audit and Transparency

• Civil society and international lenders increasingly demand transparency around Chinese loans and CPEC projects.
• Conduct a third-party debt audit to regain investor confidence.

Key Questions

What is Pakistan’s total debt as of 1 July 2025?

As of 1 July 2025, Pakistan’s total debt stands at approximately Rs. 74.6 trillion ($267.5 billion), combining domestic and external liabilities.

What is included in Pakistan’s debt repayment plan for 2025-26?

Pakistan plans to repay around $7.1 billion in external obligations through IMF funding, bilateral rollovers (mainly China and Gulf states), privatization, and sovereign bonds.

How much of Pakistan’s debt is owed to China?

Pakistan owes approximately $25.1 billion to China, accounting for about 20% of external debt, which includes CPEC-related projects, commercial loans, and SAFE deposits.

Is Pakistan at risk of default?

While default has been narrowly avoided so far due to timely IMF inflows and Chinese rollovers, sovereign risk remains high unless structural reforms and reserve buildup occur.

What is the debt-to-GDP ratio of Pakistan in 2025?

It is estimated to be 77.6%, exceeding safe limits for emerging economies.

Conclusion: Debt Pressure or Opportunity for Reform?

Pakistan’s total debt and the repayment plan in 2025 present a dual-edged reality. While the repayment calendar is undeniably tight and risky, it also forces the country toward long-delayed reforms. The government’s ability to restructure commercial debt, re-engage with the IMF, and boost exports through policy reform could help realign macroeconomic fundamentals.

But without strong political will, improved governance, and accountability, Pakistan risks entering another cycle of debt dependency and austerity without structural gain. The coming months are not just about paying loans; but about choosing a path for economic sovereignty or systemic default.

Expert Recommendation

Dr. Abid Qaiyum Suleri, Executive Director, SDPI:

“Pakistan must treat this crisis as an inflection point. Without local ownership of reforms; particularly in energy pricing and taxation, we’ll keep returning to the IMF every three years.”

Independent Financial Analyst View (Karachi-based):

“Rather than fearing sovereign rating downgrades, Pakistan should pre-emptively engage in debt restructuring talks like Ghana or Zambia did, with transparency and IMF backing.”