Pakistan's economic crisis deepens under $134 bn debt
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New Delhi: Pakistan has been struggling with a deepening economic crisis for years, marked by mounting external debt pressures, stagnant growth, and structural weaknesses caused by decades of poor governance and over-reliance on external financing, according to a report.
Pakistan’s total external debt stands at approximately $134 billion (as of late 2025 data), representing a heavy load relative to GDP, according to an article in One World Outlook.
It faces external debt repayment challenges to the tune of a staggering $23-26 billion in total servicing needs (including principal and interest) in fiscal year 2025–26, the article observed.
The recent development, where the United Arab Emirates (UAE) rolled over $2 billion of Pakistan’s debt, reflects the precarious nature of Islamabad’s financial management. This short-term fix underscores Pakistan’s ongoing dependence on bilateral rollovers from allies like the UAE, Saudi Arabia, and China to avert immediate default risks.
The country’s foreign exchange reserves have shown some recovery, with total liquid reserves at $21.29 billion as of late January 2026, but these remain vulnerable to maturities and import requirements.
