Pakistan’s external borrowing has nearly doubled in the last 10 years, reaching $135.1 billion in 2025, with China accounting for the largest share of the country’s outstanding debt among individual creditors.The increase comes as borrowing by developing economies also accelerated, taking the external debt of low- and middle-income countries to a record $9.4 trillion, according to the World Bank’s International Debt Report 2026.Pakistan’s external debt stood at $68.673 billion in 2015 before rising to $135.107 billion in 2025, Dawn reported, citing the World Bank report.Public and publicly guaranteed borrowing made up the bulk of the debt at $107.076 billion. This was followed by private non-guaranteed debt of $17.58 billion and short-term debt of $10.45 billion.A breakdown of the public and publicly guaranteed component shows that multilateral institutions accounted for $56.83 billion, while bilateral creditors were owed $42.43 billion. Private creditors held claims worth another $7.8 billion.Among individual lenders, China had the highest outstanding exposure to Pakistan at $22.4 billion. The World Bank followed with $19.2 billion, while the Asian Development Bank (ADB) accounted for $16.83 billion.The terms of borrowing also varied considerably depending on the source of credit. Pakistan’s loans from official creditors had an average maturity of 16 years and included a four-year grace period. The average interest rate on these loans was 3.6 per cent.Private borrowing was considerably more expensive, carrying an average interest rate of 8.6 per cent. These loans had a three-year repayment period and a one-year grace period.Pakistan also received financial support from key lenders during 2025. China extended the maturities on $2 billion of its loans, while the International Monetary Fund (IMF) made $2.3 billion in fresh disbursements under the Extended Fund Facility and Resilience and Sustainability Facility arrangements. These arrangements were aimed at supporting Pakistan’s long-term economic stability.The Middle East, North Africa, Afghanistan and Pakistan (Menap) region recorded improvements in its debt-service and interest ratios. However, its external debt-to-gross national income (GNI) ratio moved in the opposite direction, increasing from 26.7 per cent to 29.4 per cent in 2025.This was the biggest single-year increase in the ratio among all regions, reflecting continued accumulation of external debt.Pakistan’s rising debt was part of a wider increase in external borrowing across low- and middle-income countries (LMICs). Their combined external debt grew 5.5 per cent to $9.4 trillion in 2025, marking the sharpest increase in four years.The expansion was supported by a recovery in bond issuances, a weaker US dollar and renewed interest among private investors in lending to developing economies. This also marked a forceful return of private creditors to these markets.However, access to capital markets came with higher costs, particularly for the poorest countries, which faced some of the highest borrowing costs in decades.Debt-service payments across these economies continued to climb for the fifth year in a row. At the same time, stronger economic growth helped stabilise some debt ratios, while net long-term debt transfers turned positive after several years of outflows.The increase in borrowing was more pronounced among countries eligible for International Development Association (IDA) financing. Their external debt rose 8.1 per cent to $1.3 trillion.Low-income countries recorded an even sharper increase, with external debt climbing 8.9 per cent to $262.4 billion in 2025. This was their biggest increase since 2020.
