Pakistan’s reliance on external borrowing continues to grow as official data shows a sharp increase in foreign loans and financial assistance during the current fiscal year.
According to government records, Pakistan received $12.10 billion in external financing during the first eleven months from July to May marking an increase of $5.21 billion compared to the same period last year.
In local currency terms the inflows amounted to approximately Rs 3,364 billion, underscoring the scale of foreign support required to manage budgetary and balance of payments pressures.
External Borrowing Accelerates Year on Year
During the corresponding period of the previous fiscal year Pakistan received $6.89 billion in foreign loans and grants, highlighting a significant year-on-year rise in external financing.
The increase reflects continued fiscal strain driven by debt servicing obligations, currency pressures and limited domestic revenue growth.
Official figures show that more than $1 billion in foreign loans entered the country in May alone, pointing to growing short-term financing needs as the fiscal year approached its end.
Sources of Foreign Financial Inflows
Data released by authorities outlines a diverse mix of external funding sources.
Between July and May Pakistan received $3.10 billion from international financial institutions along with $1.31 billion in bilateral assistance from friendly countries.
An additional $2.66 billion was mobilized through the Naya Pakistan Certificate programme which targets overseas Pakistanis seeking investment opportunities.
Separately, the country also received a financial grant worth Rs38 billion, which has been reported outside the main loan figures.
Role of Key International Partners
External support from strategic partners played a central role in bolstering foreign exchange reserves.
Saudi Arabia placed a $3 billion deposit to support Pakistan’s reserves while the country also received $420 million from the International Monetary Fund as part of ongoing financial assistance.
These inflows have helped stabilize reserves and manage short-term liquidity needs, but they also add to the broader external obligations facing the economy.
Debt Sustainability Remains a Core Challenge
While higher inflows have provided temporary relief, analysts caution that rising external debt levels pose long-term risks to fiscal sustainability.
Pakistan’s continued dependence on loans from multilateral institutions and allied countries highlights structural weaknesses, including low export growth, high debt servicing costs and persistent budget deficits.
Economists stress that without durable reforms to expand revenue, improve productivity and reduce reliance on borrowing, external financing will remain a recurring necessity rather than a bridge to stability.
The latest figures reinforce the need for long-term policy discipline as Pakistan navigates economic recovery while balancing immediate financing needs with future debt obligations.
