Pakistan Gets $3.01 Billion in Foreign Loans as IMF, Saudi Support Continues
Pakistan received $3.01 billion in foreign loans during the first five months of the fiscal year FY2025-26, according to official data released by the Ministry of Economic Affairs. The figures highlight Pakistan’s continued reliance on external financing to meet budgetary needs, manage balance-of-payments pressure, and support economic stability.
In rupee terms, total foreign borrowing reached Rs. 858 billion, showing a 15 percent increase compared to Rs. 741 billion recorded in the same period last year. The rise reflects higher financing needs, debt rollovers, and inflows from friendly countries and international institutions.
Overview of Pakistan’s Foreign Borrowing in FY26
Foreign loans play a critical role in Pakistan’s economy. These funds are used to finance development projects, support foreign exchange reserves, and repay existing debt. During the first five months of FY26, Pakistan accessed loans from bilateral partners, multilateral lenders, and overseas Pakistanis.
A key contributor was the Saudi oil financing facility, under which Pakistan received $500 million between July and November. This facility helps Pakistan import oil on deferred payment terms, easing immediate pressure on foreign reserves.
Monthly Breakdown of External Borrowing
A closer look at monthly data shows fluctuations in borrowing throughout the period. In July, the government borrowed Rs. 198 billion, followed by Rs. 192 billion in August. Borrowing slowed to Rs. 124 billion in September, before rising again to Rs. 133 billion in October and Rs. 144 billion in November.
These changes reflect varying financing requirements, repayment schedules, and the timing of loan disbursements from international partners. Seasonal trends and policy decisions also influence monthly borrowing patterns.
Dollar-Wise Inflows and November Performance
In dollar terms, Pakistan received $515 million in November, around $40 million more than October’s $475 million. Out of the November inflows, $314.5 million came from bilateral and multilateral lenders, while $196.9 million was raised through Naya Pakistan Certificates.
Naya Pakistan Certificates remain an important source of foreign exchange, allowing overseas Pakistanis to invest in government-backed instruments while earning competitive returns.
Saudi Oil Financing Facility and Its Importance
Pakistan also received $100 million in October under the Saudi oil financing facility. This facility is expected to provide $1 billion over the full fiscal year, with half of the amount already disbursed.
The Saudi oil facility reduces immediate cash outflows by allowing deferred oil payments. This support is especially important for Pakistan, given high global energy prices and limited export earnings.
Grants Received During the Period
Apart from loans, Pakistan received $54.1 million in grants during the first five months of FY26. While grants form a smaller portion of external inflows, they provide non-repayable support, easing the debt burden and helping finance social and development projects.
External Financing Targets for FY2025-26
For the full fiscal year, Pakistan has projected external financing of more than $19.92 billion. This ambitious target reflects the country’s large funding requirements for debt servicing, development spending, and reserve management.
A major portion of this financing will come through rollovers of existing deposits from friendly countries rather than fresh borrowing.
Rollovers from Friendly Countries
Pakistan plans to roll over $9 billion in deposits from Saudi Arabia and China during FY26. This includes $5 billion from Saudi Arabia and $4 billion from China. So far, $3 billion from Saudi Arabia has already been rolled over.
In addition, the State Bank of Pakistan will manage a $3 billion rollover from the United Arab Emirates, further supporting foreign exchange reserves.
IMF Projections and Loan Disbursements
The International Monetary Fund (IMF) projects total external inflows of more than $25 billion for Pakistan in FY26. This includes $12 billion in rollovers from friendly countries and $2 billion in IMF loan disbursements.
Pakistan is also expected to receive around $400 million under two tranches of the IMF’s Resilience and Sustainability Facility, which supports climate-related reforms and long-term economic resilience.
Role of Multilateral Development Banks
Project financing will continue to come from major multilateral lenders, including the World Bank Group and the Asian Development Bank (ADB). These institutions provide loans for infrastructure, energy, education, health, and social protection projects.
According to official estimates, Pakistan expects to receive $1.92 billion from ADB, $1.66 billion from the World Bank Group, and $860 million from the Islamic Development Bank during FY26. This includes $700 million in short-term financing.
Panda Bonds and International Capital Markets
To diversify funding sources, the government plans to issue $250 million in Panda Bonds in China in January. Panda Bonds allow foreign issuers to raise funds in China’s domestic bond market and help Pakistan access new investors.
The financing plan also includes issuing $400 million in bonds and raising $610 million through Naya Pakistan Certificates, strengthening foreign exchange inflows.
Total Project Financing Goals
Overall, Pakistan aims to mobilize $6.4 billion in project financing through bilateral and multilateral arrangements during FY2025-26. These funds are critical for sustaining development projects, boosting economic growth, and improving public services.
Economic Impact of Rising Foreign Loans
While foreign loans provide short-term relief, rising external debt also increases repayment obligations. Higher debt servicing costs can limit fiscal space and increase pressure on government finances.
Experts emphasize the need for export growth, foreign direct investment, and structural reforms to reduce long-term reliance on borrowing.
Government Strategy Going Forward
The government aims to balance external financing with economic reforms under IMF guidance. Key priorities include improving tax collection, controlling expenditure, boosting exports, and stabilizing inflation.
Strengthening economic fundamentals will help Pakistan reduce borrowing needs and build a more sustainable growth path.
Conclusion
Pakistan’s receipt of $3.01 billion in foreign loans during the first five months of FY26 highlights the country’s continued dependence on external financing. Support from friendly countries, multilateral lenders, and overseas Pakistanis has helped stabilize the economy, but long-term sustainability depends on reforms, export growth, and investment. Managing debt wisely while strengthening economic fundamentals will remain a key challenge for policymakers in the coming years.
Frequently Asked Questions (FAQs)
1. How much foreign loan did Pakistan receive in FY26 so far?
Pakistan received $3.01 billion in foreign loans during the first five months of FY2025-26.
2. Which country provided oil financing to Pakistan?
Saudi Arabia provided oil financing, including $500 million between July and November.
3. What are Naya Pakistan Certificates?
They are investment instruments for overseas Pakistanis to invest in Pakistan and earn returns in foreign currency.
4. How much external financing is planned for FY26?
They are investment instruments for overseas Pakistanis to invest in Pakistan and earn returns in foreign currency.
5. What role does the IMF play in Pakistan’s financing?
The IMF provides loans, supports reforms, and projects external inflows, including $2 billion in disbursements.
