Pakistan's $30 Billion Debt Repayment by FY25

Pakistan is facing a significant financial challenge as it prepares to repay a staggering $30 billion in debt by the end of the fiscal year 2025. This situation has arisen due to the country’s increasing reliance on foreign loans to manage its economic needs, particularly to cover the current account deficit (CAD). The latest data from the State Bank of Pakistan (SBP) reveals that the nation is set to repay maturing foreign debt amounting to $26.48 billion over the next 12 months. Additionally, Pakistan will incur another $3.86 billion in interest expenses during this period.

The rise in foreign debt has been a growing concern for economists and financial analysts alike. Over the past decade, Pakistan's foreign debt has escalated primarily to finance its current account deficit. This deficit occurs when a country spends more on foreign trade than it earns, leading to a need for external borrowing. The Head of Research at Arif Habib Limited, Tahir Abbas, has pointed out that this trend is unsustainable and poses risks to the country’s economic stability.

As Pakistan navigates this challenging financial landscape, it is crucial for the government to implement effective strategies to manage its debt. This includes enhancing revenue generation, reducing unnecessary expenditures, and fostering an environment conducive to foreign investment. By doing so, Pakistan can work towards stabilizing its economy and reducing its dependence on foreign loans.

The upcoming repayment of $30 billion in debt is a wake-up call for Pakistan. It highlights the urgent need for comprehensive economic reforms and a shift towards sustainable financial practices. The path ahead may be fraught with challenges, but with the right measures in place, Pakistan can strive towards a more stable and prosperous economic future.