Pakistan receives $695m external financing in July

August 25, 2025 (MLN): Pakistan secured external financing worth $694.53 million in July 2025 from multiple financing sources, 12.8% lower than last month and 56.5% higher than the same month last year. 

The disbursements represent progress against the country's ambitious $19.92 billion budget estimates for foreign economic assistance in the fiscal year 2025-26, with the July figure accounting for approximately 3.5% of the annual target.

The total amount comprised $675.67m in loans and the remaining $18.86m in grants from various sources.

Going into details made available by EAD, the disbursement from bilateral and multilateral development partners totaled $498.31m in July.

Major Contributors and Funding Sources

The largest single contributor to Pakistan's foreign assistance in July was the Saudi Development Fund (SDF) Oil Facility, which disbursed $100m toward petroleum product imports under deferred payment arrangements.

This funding is part of a broader $1bn facility aimed at supporting Pakistan's energy security.

Islamic Development Bank (IsDB) short-term financing provided $131.2m in July, primarily for trade financing and oil imports.

The total IsDB short-term facility is valued at $700m for the fiscal year.

Multilateral development banks emerged as the dominant funding source, with the World Bank Group's International Development Association (IDA) disbursing $157.69m across various development projects.

The Asian Development Bank (ADB) contributed $33.45m, focusing on infrastructure and social protection initiatives.

Several major infrastructure and development projects received significant funding during the month:

• Sindh Flood Reconstruction: The province received over $100m for emergency housing reconstruction following devastating floods, with funding from both IDA and ADB sources.
• Power Sector Development: Multiple electricity generation and transmission projects received disbursements, including the Dasu Hydropower Project and various grid station upgrades, totaling tens of millions in funding.
• Water Resources: Critical water infrastructure projects in Balochistan and other provinces received continued support, with emphasis on flood resilience and irrigation system rehabilitation.

Bilateral vs. Multilateral Funding

The July disbursements showed a clear preference for multilateral funding channels, with multilateral institutions providing $379.88m (54.7%) compared to $118.43m (17.1%) from bilateral donors.

The remaining funds came from commercial sources and special deposit arrangements.

China remained a significant bilateral partner, with $6m in grant funding, while France contributed $8.5m across various infrastructure projects.

Germany provided $2.02m, primarily for renewable energy and social protection initiatives.

Of the total July disbursements, $448.06m was allocated to non-project aid, including crucial budgetary support mechanisms.

Project-specific funding accounted for $246.47m, supporting on-ground development initiatives across sectors including health, education, infrastructure, and disaster resilience.

The assistance came through various financial instruments:

• Time deposits from Saudi Arabia ($5bn) and China ($4bn) provided balance of payments support
• Commercial borrowing of $3.1bn was arranged from international financial institutions
• Bonds worth $400m were issued for general financing needs
• Naya Pakistan Certificates raised $196.22m from overseas Pakistanis

The steady flow of foreign assistance supports Pakistan's economic stabilization efforts amid ongoing fiscal challenges. The diverse funding portfolio, spanning infrastructure development, social protection, and emergency response, reflects the country's comprehensive approach to addressing development priorities.

Copyright Mettis Link News