Moody’s Investors Service has said that interest payments are projected to consume nearly 40% of Pakistan’s total expenditure by 2025, up from around 25% in 2021.
According to Pakistan’s central bank, the country is scheduled to repay $30.35 billion in maturing foreign debt and interest on external debt in 2025.
While Pakistan recently secured a $7 billion International Monetary Fund (IMF) program to ease liquidity pressures, Moody’s noted in its report, “2025 Outlook – Stable as economic risks recede, geopolitical and trade risks persist,” that concessional financing often falls short of fully replacing maturing sovereign debt.
Moreover, meeting the stringent conditions of multilateral loans could strain the social fabric.
Moody’s also said that Pakistan’s government debt affordability will remain weaker than pre-pandemic levels, reflecting broader challenges in emerging and frontier markets.
Among Asia-Pacific counries, Pakistan is particularly vulnerable to food security crises. The report underscored similar affordability issues in other countries, such as Nigeria and Egypt, which also face significant fiscal and economic pressures.
