ISLAMABAD: Pakistan Prime Minister Imran Khan said on Wednesday he hoped the relationship with the United States had been reset to a “different level” after his visit to Washington that was meant to mend fractured ties and seek ways to work with the US to help end an 18-year-long civil war in Afghanistan.
The Pakistani premier was addressing members of the US Congress at Capitol Hill shortly before he left for Pakistan after a three-day visit to Washington.
“We hope from now our relationship will be completely different. And rest assured, I will make sure that our relationship is now based on truth, on trust,” the premier said. “I hope that we again get back to the relationship [we had] that was based on closeness, on trust, on mutual respect.”
Khan said he would do his best to persuade the Afghan Taliban to come to the table for peace talks with the Kabul government but warned the United States that it would not be an “easy” task.
The United States and the Taliban are getting closer to a deal that is expected to be centered on a US pledge to withdraw troops in exchange for a Taliban promise not to let Afghanistan be used as a base for terrorism. However, the Taliban have refused to negotiate with the government, denouncing it as a US puppet regime.
“Pakistan is now trying its best to get the Taliban on the table to start this dialogue and so far we have done pretty well,” Khan said. “But it’s not going to be easy. Do not expect this to be easy, because it’s a very complicated situation in Afghanistan.”
“But rest assured we will be trying our best, the whole country is standing behind me,” he said. “The Pakistan Army, the security forces, all are behind me. We all have one objective, and it is exactly the same objective as the US: to have a peaceful solution as quickly as possible in Afghanistan.”
Pakistan’s role in the peace negotiations is a delicate one.
Afghanistan accuses Pakistan of supporting the Taliban, a charge Pakistan denies, saying it has suffered heavily from the fighting. The United States has also pressed Islamabad to do more to curb militant groups based in its territory.
Khan said he hoped that ties with the US were at a different level” after his visit, because mistrust between the two countries had been a source of “pain” for Pakistan.
PM Khan says hopeful relationship with US at “different level” after visit
PM Khan says hopeful relationship with US at “different level” after visit
- Addresses members of US Congress before leaving for Pakistan after a three-day Washington trip
- Says bringing Taliban to the table for talks with Kabul government won’t be easy task
Islamabad dismisses claims about paying up to 8 percent interest on foreign loans as ‘misleading’
- Pakistan has long relied on external loans to help bridge persistent gaps in public finances and foreign exchange reserves
- Pakistan’s total external debt, liabilities stand at $138 billion at an overall average cost of around 4 percent, ministry says
KARACHI: Pakistan’s finance ministry on Sunday dismissed as “misleading” claims that the country is paying up to 8 percent interest on external loans, saying the overall average cost of external public debt is approximately 4 percent.
Pakistan has long relied on external loans to help bridge persistent gaps in public finances and foreign exchange reserves, driven largely by a narrow tax base, chronic trade deficits, rising debt-servicing costs and repeated balance-of-payments pressures.
Over the decades, successive governments have turned to multilateral and bilateral lenders, including the International Monetary Fund, the World Bank and the Asian Development Bank, to support budgetary needs and shore up foreign exchange reserves.
The finance ministry on Sunday issued a clarification in response to a “recent press commentary” regarding the country’s external debt position and associated interest payments, and said the figures required contextual explanation to ensure accurate understanding of Pakistan’s external debt profile.
“Pakistan’s total external debt and liabilities currently stand at $138 billion. This figure, however, encompasses a broad range of obligations, including public and publicly guaranteed debt, debt of Public Sector Enterprises (both guaranteed and non-guaranteed), bank borrowings, private-sector external debt, and intercompany liabilities to direct investors. It is therefore important to distinguish this aggregate figure from External Public (Government) Debt, which amounts to approximately $92 billion,” it said.
“Of the total External Public Debt, nearly 75 percent comprises concessional and long-term financing obtained from multilateral institutions (excluding the IMF) and bilateral development partners. Only about 7 percent of this debt consists of commercial loans, while another 7 percent relates to long-term Eurobonds. In light of this composition, the claim that Pakistan is paying interest on external loans ‘up to 8 percent’ is misleading.
The overall average cost of External Public Debt is approximately 4 percent, reflecting the predominantly concessional nature of the borrowing portfolio.”
With respect to interest payments, public external debt interest outflows increased from $1.99 billion in Fiscal Year (FY) 2022 to $3.59 billion in FY2025, representing an increase of 80.4 percent, not 84 percent as reported. In absolute terms, interest payments rose by $1.60 billion over this period, not $1.67 billion, it said.
According to the State Bank of Pakistan’s records, Pakistan’s total debt servicing payments to specific creditors during the period under reference were as follows: the IMF received $1.50 billion, of which $580 million constituted interest; Naya Pakistan Certificates payments totaled $1.56 billion, including $94 million in interest; the Asian Development Bank received $1.54 billion, including $615 million in interest; the World Bank received $1.25 billion, including $419 million in interest; and external commercial loans amounted to nearly $3 billion, of which $327 million represented interest payments.
“While interest payments have increased in absolute terms, this rise cannot be attributed solely to an expansion in the debt stock,” the ministry said. “Although the overall debt stock has increased slightly since FY2022, the additional inflows have primarily originated from concessional multilateral sources and the IMF’s Extended Fund Facility (EFF) under the ongoing IMF-supported program.”
Pakistan secured a $7 billion IMF bailout in Sept. 2024 as part of Prime Minister Shehbaz Sharif’s efforts to stabilize the South Asian economy that narrowly averted a default in 2023. The government has since been making efforts to boost trade and bring in foreign investment to consolidate recovery.
“It is also important to note that the increase in interest payments reflects prevailing global interest rate dynamics. In response to the inflation surge of 2021–22, the US Federal Reserve raised the federal funds rate from 0.75-1.00 percent in May 2022 to 5.25–5.50 percent by July 2023. Although rates have since moderated to around 3.75 percent, they remain significantly higher than 2022 levels,” the finance ministry said.
“The government remains committed to prudent debt management, transparency, and the continued strengthening of Pakistan’s macroeconomic stability,” it added.
