January 28, 2025 – Pakistan has received a total of $176 million in grants for the fiscal year 2025 (FY25), contributing 1% of its ambitious external funding goal of $19.34 billion, according to the Economic Affairs Division. Although this may seem like a small portion of the target, the financial assistance provided by the United States during the first five months of FY25 has already surpassed expectations, signaling continued cooperation between the two countries.
The US grants have played a notable role in helping Pakistan reach its fiscal targets. By the end of January 2025, the country had already secured $38.3 million in grants from the United States, far exceeding the original budgeted amount of $21 million for FY25. This early influx of funds provides a significant boost to Pakistan’s external funding efforts, helping to alleviate some of the financial pressures the country faces in achieving its broader fiscal goals.
These grants, while contributing a small fraction of the total funding target, reflect the ongoing support that Pakistan has received from the United States in recent years. The funds are intended to support various development programs and humanitarian efforts in the country, ranging from health and education initiatives to infrastructure development. This assistance from the US is part of a broader pattern of international financial support aimed at helping Pakistan address its domestic challenges, including economic instability, inflation, and poverty alleviation.
The US government’s commitment to providing these grants highlights the importance of international partnerships in addressing global development challenges. Despite the relatively modest share of total funding, the US contribution remains an important source of support for Pakistan’s financial strategy, particularly given the country’s need for external assistance to bridge its fiscal gap.
However, in a shift from previous years, there have been no bilateral loan allocations from the United States in Pakistan’s FY25 budget. This marks a departure from past years, where Pakistan had received loan-based support in addition to grants. The lack of bilateral loan commitments this year suggests a more focused approach on grant-based assistance, which does not carry the same repayment obligations as loans. This shift could have significant implications for Pakistan’s overall debt profile, as the country continues to manage its external debt and seek financial support from a variety of sources.
While the absence of loans from the US may present challenges for Pakistan in terms of securing additional funding to meet its overall external financing target, the country has turned to other international sources of financial assistance. Pakistan continues to explore avenues for obtaining funds from multilateral organizations such as the World Bank and the International Monetary Fund (IMF), as well as from other bilateral donors, to meet its fiscal needs for FY25.
Pakistan’s external funding target of $19.34 billion is crucial for the country to meet its balance of payments requirements, stabilize its currency, and support its economic growth plans. The funding is expected to come from a mix of loans, grants, and other forms of external assistance, with international partnerships playing a pivotal role in helping Pakistan navigate its financial challenges.
As Pakistan progresses through FY25, the focus remains on securing the necessary resources to meet its external funding needs. While US grants contribute only 1% to this goal, they form an important part of the broader strategy to achieve fiscal stability and economic development. The country’s ability to diversify its sources of external funding will be key to ensuring long-term financial resilience and sustainable growth.