Pakistan’s external financing profile for October 2025 shows a slight improvement in inflows, yet the broader outlook continues to highlight structural weaknesses in the country’s capacity to secure diversified funding. According to the latest figures released by the Economic Affairs Division, Pakistan received $471.2 million in foreign loans during the month, marking an increase of 7.9 percent compared to September and a year-on-year rise of 13.6 percent. While the monthly uptick provides temporary relief, the cumulative data for the fiscal year underscores a slower-than-required pace of external inflows.
During the first four months of FY26, covering the period from July to October, Pakistan managed to attract a total of $2.29 billion in external financing. This represents just 11.5 percent of the government’s ambitious full-year target of $19.92 billion. The shortfall indicates persistent challenges in accessing global capital markets, limited appetite from commercial lenders, and continued reliance on short-term and bilateral arrangements. As the fiscal year progresses, the gap between planned and actual inflows poses implications for fiscal stability, debt repayments, and foreign exchange reserve management.
A closer look at the breakdown reveals that non-project support continues to dominate the inflow composition. Out of the overall $2.29 billion, around $1.52 billion, or 66 percent, came through non-project assistance primarily intended for budgetary support rather than development initiatives. Project financing remained comparatively limited, with only $773 million, or 34 percent, directed toward infrastructure and long-term development activities. This imbalance reflects the persistent reliance on financial support meant to stabilize the budget rather than strengthen development capacities.
Saudi Arabia remains Pakistan’s most significant bilateral contributor. The Saudi Fund for Development’s oil facility accounted for a substantial $400 million by October, the largest single inflow recorded during the period. When aggregated with other forms of assistance, Saudi Arabia’s total support reached $404.2 million. Meanwhile, the Islamic Development Bank provided $361.43 million in short-term financing, underscoring Pakistan’s dependence on rollover-type arrangements.
A notable portion of inflows during the four-month period came from the Naya Pakistan Certificates, contributing $734.71 million, equivalent to 32 percent of total receipts. These certificates have emerged as a critical source of foreign currency mobilization, driven largely by the Pakistani diaspora, although they do not substitute for long-term development financing.
Multilateral agencies accounted for $1.11 billion in disbursements, making up 48.3 percent of the total. The World Bank group contributed $347.5 million, the Asian Development Bank added $167.4 million, and the Islamic Development Bank provided $411.6 million including short-term facilities. Bilateral partners collectively disbursed $449.9 million during the same period, although disbursements from China remained minimal at $9.75 million.
Pakistan’s external buffers remain heavily anchored in rollover deposits rather than fresh liquidity. Saudi Arabia’s $5 billion time deposit and China’s $4 billion SAFE deposit continue to remain unchanged. While these deposits help sustain reserves, they do not function as new inflows that could ease funding pressures or improve the fiscal space.
Despite a budgeted expectation of $3.1 billion from foreign commercial banks for FY26, Pakistan has not secured any commercial borrowing up to October. The absence of commercial financing reflects strained market confidence and relatively high borrowing costs in the international market.
Project inflows have also exhibited limited momentum. The Dasu Hydropower Project received only $13.16 million between July and October, while Karachi’s Yellow Line project secured $55.89 million. Slow disbursements in development projects highlight administrative challenges and the need for improved project execution mechanisms.
Overall, the data paints a picture of cautious inflow growth overshadowed by structural constraints. Pakistan’s external financing landscape continues to be shaped by reliance on bilateral support, short-term facilities, and diaspora-backed instruments, while development financing and commercial sources remain subdued.
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