Pakistan Secures $12.5 Billion in Foreign Loans But Falls Short of Annual Target

ISLAMABAD: Pakistan has managed to secure $12.5 billion in foreign loans during the first nine months of the fiscal year 2024-25. However, this falls short of its ambitious $19.2 billion target for the full year ending June 30.

According to the Economic Affairs Division’s (EAD) monthly Foreign Economic Assistance (FEA) report, a significant portion of the inflows, around $7 billion, came from legacy rollovers by strategic partners China, Saudi Arabia, and the United Arab Emirates.

The actual fresh disbursements and grants amounted to only $5.51 billion, reflecting a nearly 20% decline compared to the same period last year. The shortfall is largely attributed to delays in the IMF’s financial support program.

Breakdown of Loan Portfolio

Of the total $12.5 billion:

• $3 billion was rolled over by Saudi Arabia
• $2 billion by the UAE
• $1 billion by China (with an additional $2 billion rolled over last month)
• $3 billion was secured for budgetary support/programme loans
• $2.4 billion was disbursed for project financing

Notably, these figures exclude IMF disbursements such as the $1 billion received under the Extended Fund Facility (EFF) in October, which is separately accounted for by the State Bank of Pakistan.

Multilateral and Bilateral Support

Multilateral agencies disbursed $2.83 billion, slightly up from last year’s $2.7 billion. Meanwhile, bilateral aid dropped sharply to $358.5 million, down from $870 million a year ago.

The Asian Development Bank led the multilateral support with $1.189 billion, followed by $979 million from the World Bank.

In a slight recovery, commercial loans worth $504 million were received from UAE-based lenders, marking the first signs of confidence after a cautious year from foreign banks. However, this figure still lags behind the government’s annual target of $3.8 billion from commercial banks.

On a positive note, remittances through Naya Pakistan Certificates saw a significant rise, clocking in at $1.455 billion, up from $781 million in the same period last year.

Funding Gap and IMF Dependencies

Pakistan’s external financing strategy continues to hinge on expected inflows of $9 billion from China and Saudi Arabia, including a $5 billion deposit from Riyadh and a $4 billion SAFE deposit from Beijing—both critical to closing the IMF-required funding gap.

Despite receiving $555 million in March alone, which marked an increase from the previous month, overall progress remains sluggish. The country still faces a net international reserves (NIR) deficit, intensifying the urgency for renewed multilateral trust and private sector participation.