Pakistan’s external debt servicing bill for fiscal year 2027 is projected to decrease by approximately $5 billion to $21.5 billion, State Bank of Pakistan (SBP) Governor Jameel Ahmad announced during a press conference on Monday. The central bank governor credited an early $6 billion rollover already secured from friendly nations in July 2026 for substantially easing pressure on the country’s immediate financing requirements. Breaking down the projected FY27 figure down from $26.5 billion recorded in FY26—Ahmad detailed that the total comprises $3.5 billion in interest payments and $18 billion in principal repayments. He attributed the reduction to an improved overall debt profile, lower financing costs, and a strategic shift away from commercial borrowing toward longer-term, multilateral financing arrangements.
Out of the $18 billion in principal debt due during FY27, the central bank expects between $10 billion and $11 billion to be rolled over or refinanced. This expected rollover reduces the net repayment requirement to roughly $7.5 billion, down from $11 billion in the previous fiscal year. With nearly $6 billion of that rollover already secured, Ahmad stated that actual cash outflows for FY27 are expected to be around $7 billion, significantly below the roughly $11 billion paid out in FY26.
Reviewing debt management strategies, Ahmad noted that Pakistan met its FY26 obligations through a combination of direct repayments, re-deposits, and bilateral rollovers from friendly countries. He indicated that a similar strategy will be deployed to cover FY27 commitments. The transition toward long-term multilateral credit is actively reducing refinancing risks while strengthening the nation’s external debt posture. Addressing the government’s debt stock, Ahmad stated that federal external debt has remained broadly stable at around $82 billion since FY22 despite extensive repayments over recent years. However, the maturity profile of this debt stock has improved noticeably, easing near-term payment obligations.
Additionally, the central bank reported a sharp contraction in its forward liabilities, which plummeted from $5.8 billion down to approximately $900 million by the end of June 2026. Ahmad emphasized that this reduction strengthens SBP’s foreign exchange reserve position, enabling the central bank to act as a net provider of foreign currency liquidity when required. Concluding his remarks, the governor linked these structural improvements to recent upgrades in Pakistan’s sovereign credit ratings. Reflecting heightened international investor confidence, Pakistan’s 10-year sovereign bond yield has dropped to around 7.7 percent, down from peak levels of nearly 35 percent. He added that the government successfully secured foreign financing at approximately 7 percent via an international bond issue a few months ago, a borrowing rate well below those faced during prior periods of financial distress.
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