Pakistan’s external debt-to-GDP ratio drops to 26% in FY25

State Bank of Pakistan (SBP) Governor Jameel Ahmad said on Wednesday the country’s external debt to GDP (gross domestic product) ratio had dropped to 26% in the fiscal year 2025 (FY25) compared to 31% a couple of years ago, reducing the nation’s reliance on foreign financing in the wake of a jump in the inflows of workers’ remittances.

In absolute numbers, “Pakistan’s foreign debt has remained stagnant for the past three year at June 2022 level [against assumption of a surge],” the central bank chief said while talking to media on sideline of its celebration of ’Pakistan Women Entrepreneurship Day 2025”.

The foreign financing that Pakistan availed between FY22 and FY25 had been fully utilised to repay the old foreign debt obligations instead for building up foreign exchange reserves, he said.

NA told: Public debt skyrockets by Rs9.3trn in FY25

Earlier, the external financing rose by on an average $6.4 billion an year from FY15 to FY22, he compared.

To recall, the size of the domestic economy has risen to $407.10 billion in FY25 compared to $375 billion in FY22, it was learnt.

The jump in inflows of workers’ remittances in the past three years has reduced the nation’s reliance on foreign funding.

The inflows of workers’ remittances surged to record $38.3 billion in FY25 compared to $30.3 billion in FY24 – rising by 27% year-on-year basis, he mentioned, projecting the remittances would surpass $40 billion mark in the ongoing fiscal year 2025-26.

Responding to a question, Ahmad acknowledged Pakistan’s imports were on the rise, settling at $5.2 billion in November 2025. He, however, dismissed the notion the current account deficit would cross the projected level of upto 1% of GDP.

“The current account deficit would remain at the July 2025 projected level of 0-1% of GDP,” he said.

He said the bank financing to small and medium-sized enterprises (SME) had increased by Rs150 billion over the past one year to Rs700 billion, showing the growth in the financing remain higher than the targeted one.

Pakistan had targeted to double SME financing to Rs1.1 trillion in five years compared Rs550 billion last year, he recalled.