China remains Pak's top bilateral creditor, share drops to 22%: World Bank

With almost USD 29 billion in loans, China continued to be Pakistan's largest bilateral creditor while Saudi Arabia emerged as the second largest bilateral lender with about USD 9.16 billion, a World Bank report has said.

However, China's share in Pakistan's total external debt went down to 22 per cent compared to 25 per cent in 2023 with Saudi Arabia increasing its share from 2 per cent in 2023 to 7 per cent in 2024.

The World Bank's International Debt Report 2024 released on Tuesday ranks Pakistan among the top three loan recipients from the International Monetary Fund (IMF) this year and also notes that Pakistan's high debt-to-export and debt-to-revenue ratios indicate a weakening fiscal position.

The International Debt Report 2024 put Pakistan's total external debt (including that from IMF) at USD 130.85 billion in 2023, accounting for 352 per cent of its total exports and 39 per cent of gross national income (GNI) while Pakistan's total external debt servicing amounted to 43 per cent of total exports and 5 per cent of GNI.

As per the 2023 edition of the report, Pakistan's total external debt (including that from IMF) was at USD 126.95 billion in 2023, accounting for 320 per cent of its total exports and 34 per cent of gross national income (GNI) while Pakistan's total external debt servicing amounted to 42 per cent of total exports and 4 per cent of GNI.

According to the 2024 report, China had the single largest share of debt to Pakistan at 22 per cent share (about USD 28.786 billion), followed by World Bank's 18 per cent share (USD 23.55 billion) and Asian Development Bank's 15 per cent share (USD 19.63 billion).

Saudi Arabia stood out as the second largest bilateral lender to Pakistan with 7 per cent of total debt or about USD 9.16 billion.

Of the total external debt stock, about 45 per cent debt (USD 58.88 billion) belonged to the bilateral lenders and 46 per cent (about USD 60.2 billion) to multilaterals, while remaining 9 per cent debt belonged to private lenders led by bondholders with 8 per cent chunk, the 2024 report said.

It further noted that of the total USD 130.85 bn, long-term external debt stocks stood at USD 110.44 billion; USD 11.53 billion was IMF credit and allocations and USD 8.878 billion was short-term external debt.

According to newspaper Dawn, the financial strain was fiercest for the poorest and most vulnerable countries those eligible to borrow from the World Bank's International Development Association (IDA). These countries paid a record USD 96.2 billion to service their debt in 2023, the data showed.

For some countries, the payments run as high as 38 per cent of export earnings but Pakistan even surpassed this landmark as its interest payments stood at 43 per cent of exports, it said, adding, Pakistan made the second-largest interest payments in South Asia while the interest payment by Bangladesh and India increased by more than 90 per cent in 2023, highest in the region.

In September, Minister of State for Finance Ali Pervaiz Malik told a meeting of the National Assembly Standing Committee that Pakistan was facing a daunting task of repaying a staggering USD 100 billion external debt over the next four years, an amount which is nearly 10 times its current USD 9.4 billion foreign exchange reserves.

The USD 100 billion external debt repayments from 2024 to 2027 are exclusive of any payments on account of the liabilities booked at the balance sheet of the central bank and the requirements for financing the current account deficit  Meanwhile, the Pakistan government on Monday admitted that there are hiccups in implementing the IMF programme, but asserted its commitment to completing the USD 7 billion package.