Pakistan’s external debt servicing surged to $10.14 billion during the fourth quarter of fiscal year 2025-26, rising sharply from $3.86 billion in the preceding quarter, according to data released by the State Bank of Pakistan. The latest quarterly figure represents an increase of approximately 2.63 times compared with Q3FY26, with the movement primarily driven by a substantial rise in principal repayments. Principal repayments increased to $8.81 billion during Q4 from $2.70 billion in Q3, while interest payments also moved higher to $1.33 billion from $1.15 billion over the same period. The sharp increase in quarterly servicing reflected higher repayment obligations across several categories of external debt and liabilities during the final quarter of FY26.
Servicing of public debt, which covers government obligations, repayments to the International Monetary Fund and foreign exchange liabilities, rose to $9.37 billion in Q4FY26 from $3.30 billion in Q3. Government debt repayments accounted for a significant portion of this amount, increasing to $5.61 billion from $2.87 billion in the preceding quarter. Within government debt servicing, principal repayments rose to $4.75 billion from $2.24 billion, while interest payments increased to $864 million from $632 million. Repayments to the International Monetary Fund, however, declined to $202 million during Q4 from $288 million in Q3. IMF principal repayments fell to $78 million from $171 million, although interest payments increased slightly to $124 million from $117 million.
Foreign exchange liabilities recorded the most pronounced increase among the components of public debt servicing during the quarter. Servicing of foreign exchange liabilities surged to $3.56 billion in Q4FY26 from only $146 million in Q3. The increase was almost entirely driven by principal repayments, which reached $3.45 billion during the quarter compared with no principal outflows recorded under this category in the preceding quarter. Meanwhile, debt servicing by public sector enterprises eased to $90 million in Q4 from $177 million in Q3. Guaranteed debt repayments declined to $71 million from $177 million, while non-guaranteed debt servicing increased to $19 million after no outflows were recorded in Q3. Bank borrowings remained relatively small, with servicing edging up to $14 million in Q4 from $13 million in the previous quarter.
Private sector external debt servicing also increased during the final quarter of FY26, reaching $662 million compared with $362 million in Q3. The rise was driven by higher principal repayments on non-guaranteed private sector debt, which climbed to $469 million from $202 million. Interest payments on private sector external debt also increased to $193 million from $159 million. No servicing was recorded under guaranteed private sector debt during the quarter, consistent with the position reported in the preceding quarter. The quarterly data therefore shows that the substantial increase in overall external debt servicing was concentrated primarily in public debt and foreign exchange liabilities, while private sector repayments also recorded an increase.
For the full fiscal year 2025-26, Pakistan’s total external debt servicing stood at $21.59 billion, comprising $16.59 billion in principal repayments and approximately $5 billion in interest payments based on the reported total. Public debt servicing accounted for $18.90 billion of the annual amount, including $13.95 billion in government debt repayments, $1.05 billion in International Monetary Fund repayments and $3.89 billion in foreign exchange liabilities servicing. Public sector enterprises serviced $553 million in external debt during the year, while bank borrowings accounted for $64 million. Private sector external debt servicing totalled $2.08 billion in FY26. The annual figures show the scale of Pakistan’s external repayment obligations, while the Q4 increase was largely associated with a sharp rise in principal repayments compared with the previous quarter.
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