Islamabad, March 20: Pakistan has secured nearly $12 billion in foreign loans during the first eight months (July-February) of the 2024-25 fiscal year, with a target of surpassing the $19.2 billion mark by the end of the fiscal year on June 30.
While half of this amount consisted of legacy rollovers from China, Saudi Arabia, and the United Arab Emirates (UAE), fresh loans and grant inflows totaled $5.95 billion, reflecting a 25% decline compared to the same period last year.
The Economic Affairs Division (EAD) released its monthly report on Foreign Economic Assistance (FEA) on Wednesday, noting that the total foreign assistance in the first eight months of FY25 was $4.953 billion, against a target of $19.4 billion for the year, which includes grants.
This is a decline from $6.678 billion recorded in the same period of the previous fiscal year, which had an annual target of $17.6 billion.
Pakistan Foreign Loans Excluding IMF Disbursements
It is important to note that the $1 billion disbursed by the International Monetary Fund (IMF) in October 2024 as part of the $7 billion ongoing Extended Fund Facility (EFF) is accounted for separately by the State Bank of Pakistan and thus not included in the FEA figures.
The $1.2 billion received under the Standby Arrangement (SBA) last year was also treated similarly.
Total Foreign Assistance: $11.95 Billion
With the inclusion of rollovers and fresh disbursements, the total external assistance for Pakistan during the first eight months amounted to $11.95 billion.
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This includes $3 billion in rollovers from Saudi Arabia, $2 billion from the UAE, and $1 billion from China. Furthermore, China rolled over an additional $2 billion earlier this month, raising its total rollover commitment to $3 billion so far.
Pakistan’s total rollover portfolio from these three countries amounts to $12.7 billion in safe deposits and loans, leaving Pakistan’s net international reserves (NIR) in a significant deficit.
Pakistan Foreign Loans Inflow Declining
The FEA report showed that total foreign inflows decreased by approximately 26% to $4.95 billion in July-February FY25, mainly due to delays in the IMF bailout and the $1 billion disbursement.
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Last year, inflows totaled $7.88 billion during the same period, including the IMF’s contribution.
In February, the EAD reported inflows of $365 million, a sharp drop compared to $830 million in January.
Breakdown of Foreign Assistance
Out of the $4.95 billion received, $2.74 billion was allocated for budgetary support or program loans, while $2.2 billion was received for project financing.
In comparison, during the same period last year, the EAD secured $5.14 billion in project aid and $1.8 billion in project loans.
- Multilateral inflows totaled $2.49 billion in 8MFY25, a drop from $3.8 billion last year.
- Bilateral disbursements stood at $334 million, a decrease from $949 million in the previous year.
- Pakistan received approximately $500 million from foreign commercial lenders (UAE-based) in 8MFY25, indicating a modest recovery in commercial financing.
Loan and Grant Projections
For the current fiscal year, the government has projected $3.8 billion from foreign commercial banks, though this has started poorly due to the delayed IMF agreement.
Additionally, the government expects $1 billion from international bonds and $9 billion in inflows from bilateral partners—mainly China and Saudi Arabia—which are crucial to filling the external financing gap under the IMF programme.
These projections include:
- $5 billion in time deposits from Saudi Arabia.
- $4 billion from China’s SAFE deposit.
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Naya Pakistan Certificates and Multilateral Support
Pakistan also received $1.3 billion from overseas Pakistanis through the Naya Pakistan Certificates, a notable increase compared to $590 million last year. Among the multilateral agencies:
- The Asian Development Bank (ADB) led with a $1.098 billion disbursement, compared to $1.93 billion in 8MFY24.
- The World Bank provided $849 million in the first eight months of FY25.
As Pakistan strives to meet its external financing needs and navigate economic challenges, the role of these loans, grants, and rollovers remains critical in supporting the country’s financial stability and development objectives.
