Pakistan's External Debt Share Drops as Eurobond Repayment Successes
Pakistan has witnessed a notable decrease in its external debt share of total public debt, dropping from 38% to 32%. Meanwhile, the debt-to-GDP ratio has declined from 77% in FY20 to 70% in FY25. The country's economic improvements have been recognized by investors, with bonds trading at a premium recently.
Pakistan's economic progress is evident in its successful repayment of a $500 million Eurobond that matured on September 30, 2025. This repayment, despite uncertainty surrounding the responsibility for paying international auction funds amounting to another $500 million due on the same date, demonstrates the country's commitment to its loan payment calculator. The Eurobond, issued in 2015 with a 10-year tenor, has been a key part of Pakistan's debt portfolio.
An IMF mission is currently in Pakistan to conduct a review under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF). If Pakistan clears the end-June 2025 review and meets agreed policy benchmarks, it stands to gain about $1 billion under the EFF and more than $100 million from the RSF.
Pakistan's external debt share reduction and successful Eurobond repayment reflect the country's improving economic indicators. The IMF review, if cleared, could bring additional financial support, further boosting Pakistan's economic prospects in its pursuit of a sustainable economy.
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