Pakistan’s Debt Composition - and the Terms on the DebtĪs of December 2022, Pakistan holds external debt and liabilities of $126.3 billion. Nearly 77% of this debt, amounting to $97.5 billion is directly owed by the government of Pakistan to various creditors an additional $7.9 billion is owed by government-controlled public sector enterprises to multilateral creditors. Who are these creditors? Pakistan’s creditors fall in four broad categories: multilateral debt, Paris Club debt, private and commercial loans, and Chinese debt. Multilateral DebtĪ major share of Pakistan’s debt is owed to multilateral institutions, amounting to roughly $45 billion. Islamabad’s main multilateral creditors include the World Bank ($18 billion), the Asian Development Bank ($15 billion) and the IMF ($7.6 billion). Pakistan owes smaller amounts to the Islamic Development Bank and the Asian Infrastructure Investment Bank as well. While a significant amount of Pakistan’s total debt, multilateral debt doesn’t present major short-term risks for Pakistan. The terms of most loans are largely concessional with a repayment timeline spanning 18 to 30 years most repayments are spread in many small transactions. In 2022-23, Pakistan repaid a total $4.5 billion debt to multilateral creditors, which is a fifth of the total debt repayment for the year. Pakistan owes $8.5 billion to the Paris Club, a group of 22 major-creditor countries. This debt is scheduled to be repaid over 40 years with less than 1% interest rate, and is mostly owed to Japan, Germany, France and the United States. Pakistan holds a large amount of private debt much of this is in the form of private bonds, such as Eurobonds and global Sukuk bonds, amounting to $7.8 billion. Some of this debt is recent: In the last fiscal year, Pakistan raised $2 billion by floating Eurobonds of 5, 10, and 30 years at an interest rate ranging from 6 percent for five years and 8.87 percent for 30 years. Pakistan holds foreign commercial loans to the tune of nearly $7 billion, which is likely to increase to nearly $9 billion by the end of the current fiscal year. Much of Pakistan’s commercial loan stock is owed to Chinese financial institutions, as Pakistan has repaid major non-Chinese commercial loans of institutions. Most commercial loans come with steep terms they have to be repaid to the lenders between one to three years. Some are benchmarked against the London Interbank Offered Rate (also known as LIBOR). Others, like Chinese commercial loans, are pegged against the Shanghai Interbank Offered Rate (SHIBOR).

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