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Pakistan secured $12.4 billion in foreign loans during the financial year 2025, representing a significant rise of $2.6 billion compared to the previous year’s figure of $9.8 billion, according to official data released by the Ministry of Economic Affairs. The increase underscores Pakistan’s growing reliance on external financing to support its struggling economy amid a challenging global financial environment.
Notably, the reported $12.4 billion excludes IMF inflows of $2.1 billion and $9 billion in rollover deposits from Saudi Arabia and China under Time Deposit and SAFE arrangements. These figures, while critical to Pakistan’s external account stability, are not classified as fresh disbursements.
Multilateral Creditors Surpass Expectations
A large portion of the foreign inflows came from multilateral creditors, which disbursed $4.838 billion during the year — surpassing the budgeted projection of $4.577 billion. This represents a vote of confidence from international institutions and demonstrates Pakistan’s improved access to concessional financing despite ongoing fiscal and political challenges.
ADB Leads with Record Disbursement
The Asian Development Bank (ADB) emerged as the top lender among multilaterals, releasing $2.13 billion, well above the projected $1.65 billion. The ADB’s support was primarily targeted at infrastructure development, energy reforms, and budgetary support in response to structural adjustment requirements.
AIIB and World Bank Contributions
The Asian Infrastructure Investment Bank (AIIB) contributed $110.37 million, supporting green infrastructure and digital development initiatives. The World Bank, however, fell short of expectations. The International Development Association (IDA) disbursed $1.37 billion, and the International Bank for Reconstruction and Development (IBRD) added another $392 million — both below projected disbursement levels, indicating possible delays in program implementation or policy commitments.
Bilateral Support: Saudi Arabia and China Play Key Roles
Pakistan’s bilateral loan inflows also exceeded projections in FY2025. In total, the country received $600 million in bilateral support. The Kingdom of Saudi Arabia disbursed $221.27 million, including funds related to the resumed Saudi Oil Facility (SOF), which allows Pakistan to import oil on deferred payment terms — a major relief for its balance of payments.
Meanwhile, China disbursed $483 million as guaranteed loans during FY2025, continuing its long-standing financial support under the China-Pakistan Economic Corridor (CPEC) framework and other bilateral commitments.
Commercial Loans Surge Amid High Debt Servicing
One of the most notable increases came from foreign commercial borrowings, which stood at $4.297 billion, outpacing the budgeted estimate of $3.779 billion. The government tapped international commercial banks for short-to-medium term financing to meet its external obligations and avoid immediate balance of payment crises.
While commercial loans offer rapid access to funds, they come at a higher cost compared to concessional multilateral lending and can add pressure on Pakistan’s debt servicing obligations, especially as global interest rates remain high.
Naya Pakistan Certificates Attract Overseas Investors
Another significant contributor to the FY2025 foreign inflows was the Naya Pakistan Certificate (NPC) scheme, which brought in $1.9 billion. The NPC platform, targeting overseas Pakistanis, offers attractive returns in USD and PKR, and has become a vital component of the government’s strategy to raise non-debt creating inflows through diaspora participation.
KSE-100 Surges 1,202 Points on Investor Optimism
The continued success of this scheme reflects the trust of overseas Pakistanis and institutional investors in Pakistan’s economic reforms and return profile.
IMF Support Not Included in Total Figure
Although Pakistan received $2.1 billion from the International Monetary Fund (IMF) during the fiscal year, these inflows are not included in the $12.4 billion total. These funds were received under the ongoing Extended Fund Facility (EFF) and newly approved Stand-By Arrangement (SBA), which are primarily used to shore up foreign exchange reserves and ensure macroeconomic stability.
Challenges Remain Despite Higher Inflows
Despite the increase in total foreign loans, concerns persist over Pakistan’s growing external debt, limited foreign exchange reserves, and the high cost of commercial borrowings. The total debt-to-GDP ratio continues to rise, and the sustainability of this financing model depends on economic reforms, export growth, and fiscal discipline.
Experts warn that unless Pakistan reduces its dependency on high-interest borrowing and improves domestic revenue generation, the debt spiral could become unsustainable in the long term.
Looking Ahead: More Loans or Sustainable Growth?
With major repayment deadlines and ongoing current account pressures, Pakistan may need to seek even more external financing in FY2026. However, the focus must shift toward sustainable economic growth, enhancing exports, and improving governance and transparency in public spending.
The FY2025 inflows may provide a temporary cushion, but lasting stability will come only from internal reforms, increased investor confidence, and better integration into global trade networks.
