Pakistan’s external debt servicing burden is estimated at 115% of its foreign exchange reserves in fiscal year 2026, according to Topline Research.
The ratio measures external public debt repayments due within one year as a percentage of the country’s foreign exchange reserves held by the State Bank of Pakistan. A lower ratio indicates stronger foreign exchange coverage.
The ratio increased in FY26 despite a rise in Pakistan’s foreign exchange reserves. This was mainly due to the repayment of UAE deposits, which pushed up the country’s external debt servicing obligations.
External Debt Servicing to FX reserves is 115% for FY26. This ratio indicates, external public debt servicing due in 1 year as % of country’s reserves (SBP). Lower the ratio means better FX coverage ratio. This ratio is expected to substantially improve to 9 year low in FY27 as… pic.twitter.com/1sxF1ouaFy
— Topline Securities Ltd (@toplinesec) August 23, 2026
However, the ratio is expected to improve significantly in FY27, falling to between 55% and 65%, which would be its lowest level in nine years. Pakistan’s external debt servicing is expected to remain between $11 billion and $12 billion in FY27, while the country’s foreign exchange reserves are projected to cross the $20 billion mark by June 2027.
For previous years, debt servicing figures were based on actual repayments, while foreign exchange reserves were calculated as the average of reserves at the beginning and end of each fiscal year.
