China is now Pakistan’s biggest creditor, holding nearly $29 billion in loans, according to a recent World Bank report. Pakistan, with a population of 240 million, is also among the top three borrowers from the International Monetary Fund (IMF) in 2023.
The World Bank’s International Debt Report highlights Pakistan’s worsening financial situation. It points out high debt-to-export and debt-to-revenue ratios, which indicate the country is struggling to manage its finances.
As of 2023, Pakistan’s external debt stands at $130.85 billion. Out of this, 22% is owed to China, making it the largest single creditor. Other major lenders include the World Bank and the Asian Development Bank.
One of the biggest challenges Pakistan faces is debt servicing. In 2023, 43% of the country’s total exports were used to pay off its external debt. This places a heavy burden on the economy and limits resources for development and growth.
The report emphasizes the need for better debt management and economic reforms to improve Pakistan’s fiscal health. Experts suggest that reducing reliance on external loans and increasing exports could help the country address its growing financial challenges.
With its debt continuing to rise, Pakistan needs to take urgent steps to stabilize its economy and reduce dependence on external borrowing. The situation highlights the importance of sustainable financial policies to ensure long-term economic stability.
