In May, Pakistan announced that it had secured $16.08 billion in foreign loans and aid over the initial ten-month period of the 2024-25 financial year, which places them close to their yearly objective of $19.2 billion by June 30. Approximately half of these funds were made up of renewed loans from China, Saudi Arabia, and the UAE. Such rollover agreements assist Pakistan with handling its debt obligations and maintaining steady reserve levels.
New loans and grants received between July and April amounted to $6.086 billion, which represents a decline of approximately 15% when compared to the same period last year. This reduction was largely due to postponements in disbursements from the International Monetary Fund’s (IMF) rescue package. Earlier this fiscal year, the IMF provided an initial payout of $1 billion through its $7 billion Extended Fund Facility program, followed by an additional $1 billion release more recently.
The government obtained $3 billion in rollover loans from both Saudi Arabia and China, along with another $2 billion from the United Arab Emirates. This brought Pakistan’s net international reserves up to approximately $3.3 billion. Nonetheless, the distribution of bilateral loans decreased dramatically by 58%, underscoring difficulties in securing external financing beyond key allies.
Foreign commercial loans, primarily sourced from UAE-based financial institutions, experienced an uptick with $706 million flowing into the country; however, this figure falls short of the government’s annual target of $3.8 billion. Factors such as economic instability and postponements by the IMF have restricted access to commercial funding sources. Additionally, Pakistan witnessed an increase in remittances via Naya Pakistan Certificates, amassing $1.61 billion against $886 million recorded in the previous year.
Bilateral funding stayed consistent, with the Asian Development Bank contributing $1.25 billion and the World Bank supplying $1.07 billion. This financial backing, combined with assistance from the IMF and rollover commitments, is essential for Pakistan to bridge its external financing shortfall and maintain economic stability through this difficult time.
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