Pakistan Secures Record $4.5 Billion in Foreign Loans in First Half of FY26
Pakistan has recorded a significant rise in external borrowing during the first six months of the current fiscal year, receiving a total of Rs. 1,272 billion in foreign loans and grants. In dollar terms, this amounts to $4.5 billion, marking an increase of $904 million compared to $3.6 billion received during the same period last year.
The latest data highlights Pakistan’s growing reliance on external financing to support budgetary needs and stabilize its balance of payments. The inflows were sourced from a combination of international lenders, including the World Bank, Asian Development Bank (ADB), Islamic Development Bank, and commercial creditors. This diversified approach underscores the government’s strategy to secure funds from multiple channels to manage fiscal and external account pressures.
For FY26, Pakistan’s government has set an ambitious target of raising Rs. 4.507 trillion, or approximately $20 billion, from external sources. These funds are intended to cover both budgetary gaps and balance-of-payments requirements, ensuring the government can maintain essential spending and debt obligations. Analysts note that while foreign loans provide immediate liquidity, continued reliance on external borrowing can increase debt servicing costs in the long term.
Officials have emphasized that the inflows will support critical development projects, infrastructure investments, and essential imports. Lenders such as the World Bank and ADB have committed funds for projects aimed at economic stabilization, poverty reduction, and infrastructure improvement, which are key priorities for the government.
The rise in external borrowing reflects broader fiscal challenges facing Pakistan, including persistent trade deficits, rising energy costs, and limited domestic revenue generation. While external financing provides temporary relief, policymakers face the challenge of balancing immediate liquidity needs with sustainable debt management strategies.
Economists suggest that alongside borrowing, structural reforms in taxation, export promotion, and energy sector efficiency will be crucial to reduce long-term dependency on foreign loans. Maintaining investor confidence, both domestic and international, remains central to ensuring continued inflows at favorable terms.
With the first half of FY26 already seeing record inflows, the government’s ability to manage these funds efficiently will be closely monitored by international lenders and domestic stakeholders alike. Achieving fiscal stability while meeting development goals will be key to sustaining economic growth in the coming months.
