Significant portion of loans consists of rollovers; fresh inflows fall short of target, raising concerns about long-term economic stability.
Key Takeaways:
i) Pakistan received $12.5 billion in foreign loans in the first nine months of fiscal year 2024-25, falling short of its annual target.
ii) Half of the received amount constitutes legacy rollovers from China, Saudi Arabia, and the UAE, indicating reliance on existing credit lines.
iii) Fresh loan and grant inflows decreased by 20% compared to the previous year, highlighting potential challenges in securing new financial assistance.
Islamabad, Pakistan – Pakistan’s economy continues to grapple with financial challenges despite receiving $12.5 billion in foreign loans between July 2024 and March 2025, according to data from the Economic Affairs Division (EAD). This inflow, however, falls short of the $19.4 billion annual target, raising concerns about the nation’s ability to meet its external financing needs.
A significant portion of the received funds, approximately half, consists of legacy rollovers from key allies like China, Saudi Arabia, and the United Arab Emirates. This reliance on existing credit lines underscores Pakistan’s dependence on its long-standing financial partnerships.
Furthermore, fresh loans and grant inflows witnessed a concerning 20% decrease compared to the same period last year. The EAD attributed this decline, in part, to delays in the International Monetary Fund (IMF) bailout program. Pakistan and the IMF reached a staff-level agreement for the release of approximately $1 billion under the Extended Fund Facility (EFF).
In related developments, overseas Pakistanis contributed $1.455 billion through Naya Pakistan Certificates, demonstrating the diaspora’s role in supporting the national economy.
Of the $12.5 billion received, $3 billion was allocated for budgetary support, while the remaining amount was earmarked for project financing. Projections for inflows from China and Saudi Arabia remain crucial for Pakistan to bridge its external financing gap, a key component of the IMF program.
In related developments, overseas Pakistanis contributed $1.455 billion through Naya Pakistan Certificates, demonstrating the diaspora’s role in supporting the national economy.
The government faces the challenge of effectively managing its debt obligations while implementing reforms to foster sustainable economic growth and reduce dependence on foreign assistance.
