Pakistan’s Debt-to-GDP Ratio Fell to 6-Year Low in FY24

Pakistan’s debt-to-GDP ratio fell to a 6-year low in the financial year 2023-24 to 70 percent, as nominal GDP has grown faster than debt driven by higher inflation. The State Bank of Pakistan (SBP) reported a 3.4 percent rise in the country’s total external debt and liabilities, which reached $130 billion by June 30, 2024, up from $126.142 billion last year. Public external debt, excluding foreign exchange liabilities, spiked by $2 billion to $86 billion in FY24. Despite the growth in external debt, the external debt-to-GDP ratio came down from 32 percent in SPLY, due to slower growth in foreign currency borrowings. However, the external debt-to-export ratio remains high at 253 percent, although it has decreased from a peak of 314 percent in FY20. External debt servicing as a percentage of foreign exchange reserves is 195 percent for FY24, with expectations of a reduction to 89 percent in FY25. Overall, Pakistan’s debt-to-GDP ratio fell to 70 percent in FY24 due to higher inflation-driven nominal GDP growth.