(Web Desk) — State Bank of Pakistan (SBP) Governor Jameel Ahmad announced that Pakistan’s total outstanding debt for the fiscal year 2025 is $26.2 billion.
However, thanks to significant debt relief from friendly nations, the country is better positioned to manage its external debt. These nations have agreed to roll over over $16 billion in loans, reducing Pakistan’s repayment obligations to $10 billion by the end of the next fiscal year, which concludes on June 30, 2025.
In the current fiscal year (FY24), the SBP has already repaid $1.5 billion towards the external debt, with $8.5 billion still due. Last fiscal year (FY23), the SBP paid $12.5 billion, while the nation’s external debt totaled $130 billion.
Finance Secretary Imdad Ullah Bosal revealed that Pakistan will receive its first tranche from the International Monetary Fund (IMF) as part of a $4.4 billion rollover of Chinese commercial loans. Additionally, Saudi Arabia and the United Arab Emirates have agreed to a one-year extension on loan rollovers, with $12.3 billion in deposits from these countries to be rolled over in FY24.
Despite these positive developments, the Finance Secretary noted that budgetary measures might lead to higher inflation. The SBP Governor projected that inflation could rise to 13.5% due to these measures and increasing energy prices. Concerns over rising wheat prices and potential regional conflicts could further drive inflationary pressures. However, he anticipates that inflation will stabilize between 5-7% starting from the next fiscal year.
Regarding foreign exchange reserves, the governor expects an increase to $13 billion by the end of FY24. He outlined a comprehensive five-year plan to stabilize the economy, focusing on controlling the current account deficit, maintaining adequate foreign exchange reserves, and achieving financial stability and transparency. The governor also stressed the importance of boosting domestic exports by 10-15%, narrowing the gap between open market and interbank dollar exchange rates, and curbing informal money transfer systems like Hundi and dollar smuggling.
While acknowledging the challenge of high interest rates necessary to control inflation, the governor expressed confidence that the policy rate will eventually decrease as the economy stabilizes and inflationary pressures ease.
