Pakistan's Financial Crisis: External Debt Soars to $100 Billion Over the Next Four Years

In the next four years, Pakistan faces a daunting challenge of repaying USD 100 billion in external debt, far exceeding its current foreign exchange reserves. Despite IMF support, the country struggles to meet its financing needs, pushing for debt rollovers and restructuring to manage the situation.

Pakistan's financial health is on the brink as it braces for an unprecedented challenge: repaying USD 100 billion in external debt over the next four years. This staggering figure dwarfs the country's existing foreign exchange reserves, currently at USD 9.4 billion.

Deputy Finance Minister Ali Pervaiz Malik revealed the alarming debt repayment schedule, acknowledging the government's struggle to manage its finances despite securing a new USD 7 billion program from the International Monetary Fund (IMF). Finance Minister Muhammad Aurangzeb further disclosed a USD 5 billion financing gap identified by the IMF for the period of 2024 to 2026.

In response, Pakistan plans to seek rollovers and restructuring of its external debts. Concerns also rise about whether debt restructuring is being considered seriously, with government officials remaining tight-lipped on the matter. The country's strategy appears to heavily rely on convincing international lenders to extend loan repayment terms, which includes substantial debts from Saudi Arabia, China, UAE, and Kuwait.

(With inputs from agencies.)