Falling US Dollar Raises Pakistan’s External Debt Obligations

Islamabad: Pakistan’s external debt obligations are increasing amid growing risks linked to a decline in the value of the US dollar against other major currencies.

Pakistan’s external debt currently stands at around USD 92 billion, of which 56 percent comprises multilateral and bilateral loans. Over the past few years, the country’s external debt and liabilities have remained close to USD 130 billion, largely due to the strength of the US dollar against other currencies such as the euro, Japanese yen, and British pound.

However, in recent days, the US dollar has started to weaken, raising concerns that if the current currency trend continues, Pakistan’s debt-to-GDP ratio could rise sharply during the ongoing quarter.

According to the “Debt Policy Statement” presented by the Ministry of Finance in Parliament, Pakistan’s external debt reached USD 91.8 billion by the end of June 2025, reflecting a year-on-year increase of 6 percent, or approximately USD 5 billion.

The report further noted that during the first quarter of the fiscal year 2026, Pakistan’s external debt recorded a slight decline of 0.4 percent, equivalent to USD 0.35 billion.