Foreign Loans to Pakistan Reach $695m in July, Rise 59% YoY

Pakistan has secured $695 million in foreign loans during July 2025, the first month of the fiscal year 2025-26, representing a 58.9% increase compared to the same month last year, according to data released by the Economic Affairs Division (EAD).

The surge in external financing highlights the country’s heavy dependence on foreign loans to support its development projects, fiscal needs, and balance of payments. Economists suggest that while this rise offers temporary relief, Pakistan must implement structural reforms to reduce reliance on borrowing.

• Total inflows: $694.53 million

• Year-on-year growth: 58.9%

• Top contributor: World Bank with $210.25 million

• Saudi Arabia's contribution: $100 million under the Saudi Oil Facility (SOF)

• Multilateral financing: $379.88 million

• Bilateral financing: $118.4 million

• Naya Pakistan Certificates: $196.22 million inflows

• Expected IMF inflows: $410 million under the RSF program

The World Bank continues to be Pakistan’s top source of concessional financing. In July 2025, Pakistan received:

• $157.69 million via the International Development Association (IDA) window.

• $52.56 million from the International Bank for Reconstruction and Development (IBRD).

These funds are aimed at supporting climate resilience projects, poverty reduction initiatives, and infrastructure development.

Under the $1 billion Saudi Oil Facility (SOF), Pakistan secured $100 million in July 2025. The facility allows Pakistan to import oil on deferred payments, helping manage its foreign exchange reserves and energy requirements.

Officials confirmed that the SOF will continue through the first 10 months of FY26, providing critical relief amid global oil price fluctuations.

Pakistan received $379.88 million from multilateral lenders in July 2025, a significant portion of the total financing:

• World Bank (IDA) — $156.24 million

• Islamic Development Bank (IsDB) — $131.20 million

• International Bank for Reconstruction and Development (IBRD) — $42.91 million

• Asian Development Bank (ADB) — $33.22 million

These funds are primarily directed towards infrastructure development, energy projects, and climate adaptation programs.

The Naya Pakistan Certificates (NPCs) continue to play a vital role in boosting Pakistan’s foreign exchange reserves.

• In July 2025, inflows under NPCs stood at $196.22 million, against a full-year projection of $609 million.

• These certificates offer attractive returns to overseas Pakistanis and are helping stabilize the country’s forex position.

Pakistan expects to receive $410 million from the International Monetary Fund (IMF) during FY26 under the Resilience and Sustainability Facility (RSF).

This funding is part of a $1.4 billion climate finance package spread over 28 months, aimed at:

• Supporting climate-resilient infrastructure

• Reducing carbon emissions

• Strengthening disaster preparedness

Pakistan secured $695 million in foreign loans in July 2025, a 59% increase from the same month last year.

The World Bank is the largest contributor, providing over $210 million through IDA and IBRD windows.

The SOF is a $1 billion deferred payment facility that allows Pakistan to import oil and manage foreign reserves effectively.

In July 2025, Pakistan recorded $196.22 million in inflows through the NPCs.

The Resilience and Sustainability Facility (RSF) provides climate finance worth $1.4 billion over 28 months to support environmental and infrastructure projects.

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