SBP chief says Pakistan paid $16bn loan interest in four years

Pakistan paid about $16 billion in interest on its foreign loans over the past four years, an average of roughly $4 billion a year, State Bank of Pakistan Governor Jameel Ahmed said on Monday at the central bank's post-monetary policy press conference, held after the policy rate was raised by 50 basis points to 12 percent.

The governor said total external debt now stands at around $107 billion, against more than $100 billion in 2022. The stock rose by only $5 billion to $6 billion across the four years, or about $1 billion to $1.25 billion a year, compared with around $6.5 billion a year between 2015 and 2022.

According to ProPakistani's account of the briefing, the governor said that had Pakistan borrowed nothing new, its external debt would still be around $116 billion today because of the interest it has paid.

Ahmed said $10 billion to $11 billion of the interest was financed with dollars the SBP bought from the domestic market rather than with fresh borrowing. The central bank purchased more than $30 billion from the market over the period, which also helped lift foreign exchange reserves from about $3 billion in early 2023, when they covered roughly two weeks of imports, to around $21.5 billion.

He said the composition of the debt has improved, with about 80 percent now owed to multilateral and bilateral lenders including the World Bank and the Asian Development Bank, up from about 55 percent in early 2023.

The governor expects annual interest payments on foreign loans to fall below $3 billion next year. He said the SBP aims to raise reserves to $23 billion by December 2026 and $25 billion by June 2027.

The figures were given as round numbers at the briefing. Neither TechJuice nor ProPakistani, the two outlets that reported the press conference, set out a lender-by-lender or currency breakdown of the interest bill.