Pakistan's foreign debt doubles in 10 years, China tops list of lenders

Pakistan's external debt rose nearly 97% in a decade to $135.1 billion, with China its biggest individual creditor. Costlier private loans and shorter repayment periods continue to pressure the country's finances.

In Short

• China is largest individual creditor with $22.42 billion lending
• Private loans cost more with higher interest and shorter terms
• Multilateral institutions hold bigger share than bilateral lenders

Pakistan's external debt has nearly doubled over the past decade to $135.1 billion, with China emerging as its biggest individual creditor, highlighting the country's continued dependence on overseas borrowing to meet its financial needs.

The country's external debt stood at $68.67 billion in 2015 and rose to $135.1 billion in 2025, an increase of nearly 97%. The latest figure was also 4% higher than the previous year.

According to the World Bank's International Debt Report 2026, Pakistan's external debt includes public and publicly guaranteed borrowing, private non-guaranteed debt and short-term obligations. Of the total, $107.07 billion was public and publicly guaranteed debt, while private non-guaranteed debt stood at $17.58 billion. Short-term debt accounted for another $10.45 billion.

China was Pakistan's largest individual creditor, with outstanding lending of $22.42 billion in 2025. This was higher than the amount owed to the World Bank's International Development Association (IDA), at $19.21 billion, and the Asian Development Bank, at $16.83 billion.

However, multilateral institutions collectively accounted for a larger share of Pakistan's public and publicly guaranteed external debt than bilateral lenders.

CHINA IS PAKISTAN'S BIGGEST INDIVIDUAL CREDITOR

The creditor breakdown shows that Pakistan owed $56.83 billion to multilateral institutions and $42.44 billion to bilateral creditors in 2025.

Within multilateral lending, the World Bank-IDA accounted for $19.21 billion, while the Asian Development Bank accounted for $16.83 billion. Other multilateral creditors accounted for $20.79 billion.

Among bilateral lenders, China accounted for $22.42 billion, making it the largest individual country creditor. Pakistan owed another $11.85 billion to other bilateral creditors, while lending involving multiple lenders accounted for $8.17 billion.

The figures underline China's significant position in Pakistan's external financing. However, the broader creditor mix also shows the importance of multilateral institutions in meeting the country's borrowing requirements.

PRIVATE LOANS COST PAKISTAN MORE

Another concern highlighted by the debt report is the difference in borrowing costs between official and private creditors.

The average interest rate on new commitments from official creditors was 3.6% in 2025, compared with 8.6% for private creditors. The repayment terms were also significantly different.

New loans from official creditors had an average maturity of 16 years and a grace period of four years. In comparison, private creditors offered an average maturity of just three years and a grace period of one year.

This means Pakistan's borrowing from private creditors comes with higher interest costs and shorter repayment timelines, increasing the pressure to arrange funds for repayments.

HOW MUCH OF PAKISTAN'S DEBT IS PUBLIC?

The composition of Pakistan's external debt also shows that the government and publicly backed borrowers account for the largest share.

Public and publicly guaranteed debt stood at $107.07 billion in 2025, accounting for nearly 79% of total external debt. Private non-guaranteed debt was $17.58 billion, while short-term obligations stood at $10.45 billion.

The distinction matters because public and publicly guaranteed borrowing creates repayment obligations for the government or entities whose debt carries a public guarantee.

CHINA, IMF SUPPORT PROVIDE SOME RELIEF

Pakistan has also received some breathing room from its overseas lenders.

The World Bank report notes that China extended the maturity of around $2 billion in loans due for repayment in 2025. Such extensions give Pakistan additional time to meet its repayment obligations.

The International Monetary Fund (IMF) also disbursed $2.3 billion to Pakistan in 2025 under its Extended Fund Facility and Resilience and Sustainability Facility arrangements.

The support comes as Pakistan continues to manage its external financing requirements and work towards economic stability.

The broader picture is that Pakistan's external debt has almost doubled in a decade, with China remaining its largest individual creditor. While multilateral institutions account for a larger combined share of public external debt, the higher cost and shorter maturity of private borrowing remain important pressure points for the country's finances.

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