Pakistan has paid about $16 billion in interest on foreign loans over the past four years, averaging roughly $4 billion a year, according to State Bank of Pakistan (SBP) Governor Jameel Ahmed.
The governor noted that Pakistan’s external debt rose by $5‑$6 billion over the last four years, representing an annual increase of roughly $1‑$1.25 billion. By comparison, the country’s foreign borrowing grew at an average pace of $6.5 billion per year between 2015 and 2022.
He added that roughly $10‑$11 billion of the interest outflows were met by dollars bought by the central bank on the foreign‑exchange market, avoiding new borrowing. Over the same span, the State Bank of Pakistan acquired more than $30 billion from the market.
These interventions contributed to a rebound in Pakistan’s foreign‑exchange reserves, which climbed from about $3 billion at the start of 2023 to roughly $21.5 billion.
The composition of the external debt portfolio has improved, with close to 80 % now owed to multilateral and bilateral creditors such as the World Bank and the Asian Development Bank, up from around 55 % in early 2023.
He expressed optimism that Pakistan’s annual interest payments on foreign loans would drop below $3 billion in the coming year.
The State Bank has also set reserve targets of $23 billion by December 2026 and $25 billion by June 2027.
The announcement followed a 0.5‑percentage‑point hike in the policy rate, bringing the benchmark to 12 %.
