On Sunday, February 22, 2026, the Ministry of Finance issued a formal clarification to correct “misleading” media reports regarding Pakistan’s mounting external debt and interest payments. The ministry emphasized that the bulk of Pakistan’s borrowing remains on highly concessional terms.
The Debt Breakdown: Public vs. Aggregate
The Ministry highlighted a critical distinction between total national liabilities and the debt actually managed by the government:
| Category | Amount | Scope |
| Total External Debt & Liabilities | $138 Billion | Includes private sector debt, bank borrowings, and Public Sector Enterprises (PSEs). |
| External Public (Government) Debt | $92 Billion | The portion for which the federal government is directly responsible. |
Debunking the “8% Interest” Claim
The Ministry categorically dismissed assertions that Pakistan is paying interest rates as high as 8% on its foreign loans.
- predominantly Concessional: Nearly 75% of the $92 billion public debt consists of long-term, low-interest financing from multilateral institutions (like the World Bank and ADB) and bilateral partners.
- The Real Average Cost: The overall average interest rate on external public debt is approximately 4%.
- Global Context: The Ministry noted that while U.S. Federal Reserve rates have moderated to around 3.75% (down from a 5.5% peak in 2023), global borrowing costs remain higher than they were in 2022, which accounts for the rise in absolute interest outflows.
Finance Ministry refutes claim of Pakistan paying up to 8% interest on external loans as misleading. External debt interest outflows rose 80.4% from $1.99bn in 2022 to $3.59bn in 2025, not 84% as reported. #PakistanEconomy #FinanceMinistry pic.twitter.com/WZKdrpOjJ0
— Digital PK News (@DigitalPKNews) February 23, 2026
Interest Payment Trends
While the rates are lower than reported, the total volume of interest payments has still grown significantly due to the increased debt stock:
- FY 2022: $1.99 Billion
- FY 2025: $3.59 Billion (An 80.4% increase over three years).
- Specific Creditors: State Bank records show that during this period, the IMF received $1.50 billion (of which $580 million was interest), and Naya Pakistan Certificates accounted for $1.56 billion in payments.
IMF Review & Economic Stability
The clarification comes just days before a high-level IMF staff team arrives in Pakistan (scheduled for February 25) for the third review of the $7 billion Extended Fund Facility (EFF).
The Ministry credited the IMF program for helping rebuild foreign exchange reserves, which had famously plummeted to less than one month of import cover during the 2022–23 crisis. The IMF recently praised Pakistan’s “strong” fiscal performance, noting a primary surplus of 1.3% of GDP—meeting all program targets so far.
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