Islamabad:
Pakistan obtained a record of $ 26.7 billion in foreign loans during the last financial year, almost half of it in the form of rollovers of loans previously obtained, indicating the country’s in-depth dependence on multilateral and bilateral creditors.
The $ 26.7 billion disbursed during the year 2024-25 were slightly higher than the previous year, according to data compiled by the Ministry of Economic Affairs, the Pakistan State Bank (SBP) and the Ministry of Finance.
Of the $ 26.7 billion in foreign loans, only $ 3.4 billion or almost 13% were received for project financing, official details published by the Ministry of Economic Affairs.
These low receipts for the financing of the project underline the difficulties of reimbursement of loans, because most foreign loans are used for budgetary support and to build exchange reserves, which do not generate any of the income for reimbursement.
The gross exchange reserves of the central bank of $ 14.5 billion at the end of June are largely the result of the Rollovers, of the refinancing of existing loans and new loans. This highlights Pakistan’s growing dependence on foreign creditors, making economic stability increasingly vulnerable.
According to details, the Ministry of Economic Affairs reserved $ 11.9 billion in federal government accounts, or about $ 1.2 billion more than the previous year. The International Monetary Fund (IMF) paid $ 2.1 billion, while an additional $ 12.7 billion came as cash deposits of Saudi Arabia, China, the United Arab Emirates and Kuwait.
Saudi Arabia has placed $ 5 billion in cash deposits with the central bank in Pakistan, invoicing an interest of 4% on loans. The amount is overthrown each year because Islamabad remains unable to reimburse. Interestingly, the IMF three -year program is based on the continuous overthrow of these $ 12.7 billion loans, doubting the depth of the stability of the external sector.
China has put $ 4 billion in cash deposit, invoicing more than 6% in interest. The water deposited $ 3 billion with the central bank.
China has also spent $ 484 million in guaranteed loans during the last financial year, used mainly for asset purchases.
Pakistan failed to operate international financial markets last year and its planned borrowing of $ 1 billion through Eurobonds and Panda Obligations did not materialize. Instead, the government and the central bank obtained an expensive foreign commercial loan, supported by multilateral guarantees, to fill the gap.
With the Pakistan credit rating in compensation status, the country remains locked in world capital markets and has to pay high interest rates on commercial loans and cash deposits.
The Ministry of Finance managed to obtain $ 4.3 billion in commercial loans, mainly refined Chinese loans and others supported by the guarantees of the Asian Development Bank (BAD).
Bad paid $ 2.1 billion in new loans, $ 500 million more than expected. Multilateral institutions contributed $ 6.9 billion overall, including $ 2.1 billion in the IMF.
The World Bank published $ 1.7 billion, $ 300 million less than the budgetary amount and has not announced any new budgetary support for the current financial year.
The Islamic Development Bank has paid $ 716 million and Saudi Arabia granted $ 200 million in the context of a 6% interest in oil financing, making it an expensive loan.
Pakistan’s debt / GDP ratio and the GDP -funding funding funding ratio currently exceeds sustainable levels, according to the Ministry of Finance. Gross funding must exceed 15% of GDP is considered to be unsustainable. The previous projections of the Ministry of Finance suggest that Pakistan will remain above this threshold for at least the next three years.
In its first examination of the $ 7 billion program, the IMF reported several risks to the coherent implementation of policies, including resistance to reforms, underperformance of tax revenue, high gross financing needs, low gross reserves and a net net exchange position of the SBP. He also warned that socio-political tensions could erode the reimbursement capacity and the sustainability of the debt.
For three exercises, the financial year2025-26 at the financial year2027-28, the IMF provided Pakistan external external financing requirements at $ 70.5 billion. These figures may vary depending on the changes in the current account deficit, payment flows and exports.
The IMF has also said that the overall risk of sovereign stress remains high, reflecting a high level of vulnerability to high debt levels, large gross financing needs and low reserve stamps. However, the government assured the IMF that he closely monitored the vulnerabilities of the debt resulting from high raw financing requirements and a significant sovereign bank link.
