Govt raises $16.2 billion in external financing, misses FY26 target

• IMF provided $420m under climate finance facility.
• Saudi Arabia placed a $3bn time deposit with Pakistan.
• Foreign economic assistance inflow stood at $15.764bn.

ISLAMABAD: With Chinese refinancing of a commercial loan of $1.7 billion, Pakistan has fetched $16.2 billion in the shape of foreign loans during the last financial year ended on June 30, 2026, The News reported. 

However, Islamabad could not secure the desired target of $19.92bn in the form of loans and grants in the fiscal year 2025-26, so it missed the target by $3.72bn.

In June 2026, the major chunk of disbursements of foreign loans was secured from the multilateral lending agencies, with the top lender, the Asian Development Bank (ADB), disbursing $953.74 million in the last month of 2025-26.

According to the official data of the Economic Affairs Division for the fiscal year 2025-26, the government secured refinancing of $1.7bn from China Development Bank (CDB) and $203.33m from Standard Chartered Bank (SCB) London, so the Government of Pakistan obtained $1.903bn as foreign commercial loans in this fiscal year.

The government had envisaged to secure $3bn commercial loans, but this target was missed with a margin of $1.1bn in 2025-26.

China provided a guarantee of $392m in the last fiscal year 2025-26. Among the bilateral partners, the total disbursement stood at $1.355bn in the fiscal year 2025-6, out of which the Kingdom of Saudi Arabia provided $1.01bn, mainly in the shape of Saudi Oil Facility (SOF) on deferred payment to the tune of $100m on a monthly basis till March 2026.

However, Pakistan has made a fresh request to resume the Oil Facility for the medium term, but so far it is under consideration. Among other bilateral partners, China provided $108m, Denmark $90m, France $71.68m, Germany $13.35m, Japan $26.69m, Korea $9.49m, Kuwait $26.06m, and the US $0.64m.

The multilateral lenders have disbursed cumulatively to the tune of $5.03bn in the fiscal year of 2024-25 out of which ADB has disbursed loans of $1.772bn, AIIB $123.85m, World Bank’s IBRD loan of $516m and WB’s IDA loan of $1.5bn, Islamic Development Bank $68.13m, IDB (short term) loan of $1.01bn, $IFAD loan of $25.5m, OPEC Fund $0.11m and UN $0.9m.

From multilateral and bilateral creditors, Pakistan has received $6.39bn in the fiscal year 2025-26.

Pakistan had also reappeared on the radar screen of international investors after a pause of several years and launched two international bonds of $1bn, including $750m of Eurobond and $250m of Panda bond.

The country attracted $3.049bn as Naya Pakistan Certificate (NPC), including $930.8m as conventional NPC and $2.118bn as NPC Islamic. The IMF has disbursed $420m for RSF (Climate Finance) in the fiscal year. The disbursement from the IMF on account of the Extended Fund Facility (EFF) is deposited into the domain of the State Bank of Pakistan (SBP). Pakistan also secured a $3bn Time Deposit from the Kingdom of Saudi Arabia.

When contacted, Adviser to the Ministry of Finance Khurram Shahzad stated that the $15.764bn represents the net inflow of foreign economic assistance received directly by the central government of Pakistan during the Jul-Jun 2025-26 fiscal period, rather than standard commercial bank deposits.

This figure is calculated by combining $149.53m in total central grants (non-repayable aid from bilateral countries, multilateral institutions, and the UN) with $15,615.39m in total central loans and financing instruments.

The loan portion comprises diverse funding streams, including institutional multilateral loans ($4.991bn), Naya Pakistan Certificates ($2.118bn), foreign commercial bank lines ($1.900bn), international sovereign bonds ($1bn), IMF funds ($420m), bilateral nation debt ($1.25bn), and a specific $3bn central bank time deposit from the Saudi Fund for Development.

Originally published in The News