Key Takeaways
- Pakistan secured $27.2 billion in external financing during FY2025-26.
- Merchandise exports declined by 6 percent to $30 billion, while imports exceeded $69 billion.
- 88 percent of the total external financing was used for budgetary support and debt repayments.
Pakistan concluded its fiscal year 2025-26 with a significant amount of external financing, securing $27.2 billion in total, nearly matching the country’s export earnings of $30 billion during the same period. According to official data released by the Ministry of Economic Affairs, this financial support is crucial for addressing Pakistan's economic challenges.
The breakdown of the external financing reveals that a substantial portion was utilized for budgetary support and debt repayments. Specifically, nearly 88 percent, or $24 billion, of the total external inflows were directed towards these purposes. This indicates that while the country managed to secure significant funding, much of it went towards maintaining existing financial obligations rather than new development projects.
Despite the substantial external financing, Pakistan faced a trade deficit of nearly $40 billion due to higher import levels exceeding merchandise exports by over $39 billion. The decline in merchandise exports by 6 percent further highlights the economic pressures faced during the fiscal year. Additionally, foreign direct investment remained below $2 billion, indicating limited inflows from this source.
The sources of external financing were diverse and included loan rollovers, refinancing, and new loans from various entities. Saudi Arabia contributed significantly with a $5 billion rollover in deposits, while China maintained its support by keeping $4 billion in deposits and disbursing an additional $393 million in guaranteed loans. The government also raised approximately $1 billion through Panda Bonds and private placements, as well as $1.9 billion in commercial loans, including $1.7 billion from the China Development Bank.
Other international financial institutions such as the Asian Development Bank, World Bank, and Islamic Development Bank provided significant support, disbursing $1.8 billion, nearly $2 billion, and $1 billion respectively. Saudi Arabia also extended an additional $1 billion under its oil financing facility before it expired in April 2026. The government further mobilized more than $3 billion through Naya Pakistan Certificates.
While the external financing provided a temporary respite to address immediate financial needs, the focus on budgetary support and debt repayments suggests that long-term economic stability will require sustained efforts in diversifying sources of revenue and fostering growth in export sectors. The challenge remains to balance these priorities while addressing the broader economic landscape.
