Pakistan's borrowing in FY2025 exceeds budget estimates
Pakistan secured $12.4 billion in foreign loans during FY2024–25, surpassing the government’s budgeted target by $2.6 billion, according to data released by the Economic Affairs Division (EAD). The figure excludes loan rollovers but marks a notable rise from the $9.8 billion secured in FY24.
Key Drivers Behind Increased Borrowing
The surge in foreign inflows was primarily driven by a revival of the Saudi
Oil Facility (SOF), enhanced borrowing from commercial banks, and inflows from
multilateral and bilateral sources. Notably, Pakistan also secured $100 million
per month under the SOF in the final two months of the fiscal year, amounting
to $200 million.
While inflows from several sources exceeded expectations, disbursements from
the World Bank fell short. Pakistan received $392 million under the
International Bank for Reconstruction and Development (IBRD), compared to the
estimated $550.2 million. Similarly, the International Development Association
(IDA) provided $1.37 billion—below the $1.525 billion target.
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Breakdown of Key Inflows
·
Multilateral Creditors: $4.838
billion, exceeding the $4.577 billion estimate
·
Bilateral Sources: $600
million, surpassing the $471 million target
·
Asian Development Bank (ADB): $2.13
billion
·
Asian Infrastructure Investment Bank (AIIB):
$110.37 million
·
China (guaranteed loans): $483
million
·
Saudi Arabia: $221.27 million (vs.
$71 million budgeted)
·
Foreign Commercial Loans: $4.297
billion (vs. $3.779 billion estimated)
Pakistan also raised $1.9 billion through Naya Pakistan Certificates, outperforming the projected
$460 million. However, the government failed to launch the planned $1 billion
in international bonds, mainly due to unfavourable global interest rate
conditions.
IMF and Rollovers
Although not included in the EAD’s primary loan total, Pakistan received $2.1 billion from the International Monetary Fund
(IMF) under ongoing arrangements. Additionally, the country
secured $9 billion in rollovers from
Saudi Arabia, including Time Deposits and SAFE deposits.
Further details on these arrangements were not disclosed.
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Overall, the government’s foreign financing position in FY25 showed significant improvement, largely due to increased support from multilateral and commercial lenders, although some shortfalls remain in development finance and bond issuance.
Source: Profit Pakistan