Pakistan relied on $27.2 billion in foreign financing during FY2025-26, with nearly $24 billion used to support the budget, repay external debt and shore up foreign exchange reserves, highlighting the country’s continued dependence on external lenders despite ongoing IMF-backed reforms.
Official data from the Ministry of Economic Affairs, combined with publicly announced IMF and bilateral financing, shows Pakistan secured $16 billion in fresh external loans during the fiscal year ended June 30. The total financing rises to $27.2 billion after including $2.2 billion from the IMF, $5 billion in Saudi rollovers and $4 billion in Chinese rollovers.
Only $3.4 billion, or roughly 13 percent, was allocated to development projects, while the overwhelming majority financed fiscal needs, debt servicing and foreign exchange reserves.
The figures underscore Pakistan’s continued reliance on refinancing existing obligations rather than generating sufficient foreign exchange through exports and investment.
The State Bank’s gross foreign exchange reserves stood at $18.5 billion at the end of June, supported largely by loan rollovers, fresh borrowing and central bank dollar purchases rather than sustained improvements in external earnings.
Meanwhile, Pakistan’s merchandise exports declined 6 percent during FY26 to about $30 billion, according to the Pakistan Bureau of Statistics. Imports exceeded exports by roughly $40 billion, keeping pressure on the country’s external financing requirements. Foreign direct investment also remained weak, falling below $2 billion.
Finance Minister Muhammad Aurangzeb said this week that Pakistan was well positioned to secure another rollover of a $3 billion Saudi deposit that matured after a three-month placement in April.
Saudi Arabia currently maintains $8 billion in deposits with the State Bank, earning interest of around 4 to 4.5 percent. The deposits continue to be rolled over as Pakistan remains unable to repay them at maturity.
China also holds $4 billion in deposits with Pakistan at interest rates exceeding 6 percent. During FY26, China additionally disbursed $393 million in guaranteed loans, mainly for asset financing.
Pakistan also raised about $1 billion through Panda Bonds and private placements backed by international guarantees, while securing $1.9 billion in commercial financing, including $1.7 billion from China Development Bank and $200 million from Standard Chartered Bank.
Among multilateral lenders, the Asian Development Bank disbursed $1.8 billion, while the World Bank released nearly $2 billion during the fiscal year. The Islamic Development Bank extended $1 billion, and Saudi Arabia provided another $1 billion under its oil financing facility before the arrangement expired in April.
According to IMF projections, Pakistan’s gross external financing requirement will remain elevated at $21.2 billion in the current fiscal year before rising to around $30 billion in the following year, when the country’s current IMF programme is scheduled to end.
The government also mobilized more than $3 billion through the Naya Pakistan Certificates, adding another source of relatively expensive external borrowing.
