Islamabad: Pakistan secured USD 12.4 billion in foreign loans during the financial year 2025, marking a 27% increase from the USD 9.8 billion borrowed in FY24, according to official data from the Economic Affairs Division (EAD). The inflows exceeded the government’s budgeted target by USD 2.6 billion, though this figure excludes rollovers and IMF support.
The rise in external financing was largely driven by the resumption of the Saudi Oil Facility (SOF), enhanced commercial borrowing, and higher-than-expected inflows through the Naya Pakistan Certificates. However, Pakistan missed several planned targets, including the issuance of international bonds and expected disbursements from some multilateral agencies.
Multilateral creditors disbursed a total of USD 4.838 billion, surpassing the budgeted estimate of USD 4.577 billion.
Bilateral financing reached USD 600 million, exceeding the target of USD 471 million.
Foreign commercial loans totaled USD 4.297 billion, higher than the USD 3.779 billion projection.
Naya Pakistan Certificates brought in USD 1.9 billion, significantly more than the budgeted USD 460 million.
Asian Development Bank (ADB) contributed USD 2.13 billion, while China disbursed USD 483 million in guaranteed loans.
Saudi Arabia provided USD 221.27 million, well above the USD 71 million target.
Asian Infrastructure Investment Bank (AIIB) contributed USD 110.37 million.
Notably, the government also received USD 100 million per month from the Saudi Oil Facility in the last two months of FY25, adding up to approximately USD 200 million. In addition, USD 9 billion in loans were rolled over by Saudi Arabia in the form of Time Deposits and SAFE deposits, though details of the rollover arrangement were not disclosed by the EAD.
Missed Targets
Despite strong inflows from several sources, Pakistan failed to launch international bonds during FY25, missing the USD 1 billion target. Officials attributed this to rising international interest rates, which made borrowing through bonds less feasible.
Disbursements from the World Bank also fell short. Loans from the International Bank for Reconstruction and Development (IBRD) amounted to USD 392 million, below the USD 550.2 million estimate. Similarly, International Development Association (IDA) loans came in at USD 1.37 billion, short of the USD 1.525 billion target.
Moreover, the total inflow figure does not include the USD 2.1 billion received from the International Monetary Fund (IMF) during the fiscal year, which is categorized separately.
Outlook
The increase in foreign loan inflows reflects Pakistan’s ongoing reliance on external financing to meet budgetary and development needs. While higher disbursements provide short-term liquidity support, experts warn that the growing debt burden may become more challenging to manage amid global tightening and limited fiscal space.
Nonetheless, the government continues to engage with multilateral and bilateral partners to secure future financing as it navigates economic reforms and prepares for the next IMF program.
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