Pakistan paid $2.7b in interest to IMF alone. Can it ever break free? | The Express Tribune
The budget plans to take on new debt of Rs11 trillion. This will be added to the already crippling level of existing debt, which stands at Rs76 trillion. photo: file LAHORE: Pakistan’s growing foreign debt burden continues to weigh heavily on the national economy, with the country paying billions of dollars annually in interest to…
The budget plans to take on new debt of Rs11 trillion. This will be added to the already crippling level of existing debt, which stands at Rs76 trillion. photo: file
LAHORE:
Pakistan’s growing foreign debt burden continues to weigh heavily on the national economy, with the country paying billions of dollars annually in interest to international lenders, mainly the International Monetary Fund (IMF).
According to the Pakistan Industrial and Traders Association Front (PIAF), Pakistan has paid the equivalent of $2.69 billion in interest under various IMF programmes, including $401.24 million Special Drawing Rights (SDR) in additional charges from 2008 to June 2025, a staggering reminder of how deeply entrenched the nation has become in external borrowing.
Speaking on the issue, PIAF Chairman Syed Mehmood Ghaznavi warned that Pakistan could not stand on its own feet without freeing itself from the trap of foreign loans. He said that instead of relying on repeated bailout packages, the government should immediately implement fiscal discipline.
“If we truly want to begin repaying our debt and achieving economic sovereignty, both the federal and provincial governments must announce at least a 60% cut in their non-development expenditures,” Ghaznavi said.
He added that according to a report, Pakistan’s total debt servicing payments had continued to rise sharply over the past decade. Between 2009 and 2015, the government paid $257.5 million SDR in interest, followed by $14.5 million SDR under the Emergency Natural Disaster Assistance 2010 programme during 2010-2015. The Extended Fund Facility (EFF) alone cost Pakistan $543.6 million SDR between 2013 and 2025, while $411.4 million SDR was paid under the Extended Facility 2019 programme from 2019 to 2025.
Under the Rapid Financing Instrument Loan 2020, Pakistan paid $110.1 million SDR in interest between 2020 and 2025, whereas the Standby Arrangement 2023 cost $142.23 million SDR from 2023 to 2025. The EFF 2024 added a further $17.6 million SDR in interest during 2024 and 2025.
The data also reveals that the government’s highest annual interest payment came in 2025, amounting to $376 million SDR, compared with $325.79 million SDR in 2023 and $142.6 million SDR in 2022.
Economists note that Pakistan’s mounting debt obligations have left little room for development spending, putting enormous pressure on fiscal stability.
The country’s external debt and liabilities were hovering around $135 billion as of June 2025, according to the State Bank of Pakistan, while the government continues to borrow more to service old loans. This cycle of borrowing to repay previous debts has created what many experts call an unsustainable financial trap.
Economist Dr Saleem Ahmed believes that Pakistan’s debt crisis has now reached a point where policy reform is no longer optional but essential.
“The biggest problem is not borrowing itself but how borrowed money is used. Much of the external debt has gone into consumption and import financing instead of productivity or industrial expansion. Without export-driven growth and fiscal consolidation, Pakistan will keep taking loans just to repay previous ones,” he added.
Analysts also note that the IMF’s lending terms have grown stricter with each successive programme, leading to higher interest payments and additional surcharges. The frequent devaluation of the rupee has further inflated the cost of foreign debt servicing, making it even harder for Pakistan to meet its obligations.
“Pakistan’s challenge is clear, either continue to feed the debt monster or take bold steps towards long-term financial discipline and sustainable growth,” Ahmed said, adding the “country’s real independence will come not from political slogans but from economic self-reliance.”
Ghaznavi added that the situation required urgent parliamentary attention and a collective political will. “The foreign debt monster is swallowing our national wealth. Every rupee spent on debt servicing is a rupee taken away from education, healthcare and infrastructure. We urge policymakers to draw up a parliamentary-level policy to gradually free Pakistan from this debt trap,” he added.
