ISLAMABAD: Pakistan began the new fiscal year with foreign inflows of $695 million in July, a 59 per cent increase compared to the same month last year.

This boost came from $675m in foreign loans and $19m in grants, reflecting a significant rise from last year’s $426m in loans and $10.5m in grants.

The uptick in inflows comes after the finalisation of Pakistan’s Extended Fund Facility (EFF) with the International Monetary Fund (IMF), which had been delayed following the approval of the federal budget. Despite this, the government was able to achieve robust growth in both loan and grant categories in July.

The target for foreign inflows in the current fiscal year has been set at $19.9 billion, slightly higher than the $19.4bn target for the previous year. This includes $6.4bn from multilateral and bilateral lenders, $400m in international bonds, $3.1bn in foreign commercial loans, as well as substantial time deposits from Saudi Arabia and China.

Pakistan receives $695m in foreign loans and grants

In July 2023, Pakistan had secured over $2.89bn in foreign loans, largely due to the signing of a 9-month Stand-By Agreement (SBA) with the IMF. This resulted in substantial inflows, including $2bn from Saudi Arabia and $1.2bn from the IMF. Overall, total inflows for July 2023 amounted to $5.1bn.

However, this year’s foreign inflows were significantly higher, with July seeing $694.53m compared to $436.39m in the same month last year. The Ministry of Economic Affairs (EAD) confirmed that out of this amount, $246.47m were for project financing, a 20pc decline from the $307m received in July 2024. On the other hand, non-project financing surged to $448m in July 2025, up almost 250pc from $129m a year earlier.

A notable development this year was the sharp increase in budget support loans, which reached $196m in July, compared to just $1.23m in the same month of 2024. This marks a record increase in budget financing, despite the annual target for budget support being set at $13.5bn for the current year, lower than last year’s target of $15bn.

Pakistan was also able to secure $100m from the Saudi Oil Facility in July, against an annual target of $1bn. The government’s overall foreign financing targets include $5bn from multilateral lenders, excluding the IMF. In July, $380m was received from multilateral lenders, up from $201m in the same month last year, reflecting an increase in multilateral support despite the reduced full-year target of $4.5bn.

Bilateral lenders, excluding the three strategic allies, contributed $118m in July, slightly surpassing the $108m from the previous year. The annual target for bilateral inflows stands at $1.36bn. Total inflows from both bilateral and multilateral sources amounted to $498.3m in July, against the annual target of $6.4bn. Last year, Pakistan had received $309m from these lenders, with an annual target of $5.05bn.

Remittances from overseas Pakistanis also saw an uptick in July, with $196.2m received through Naya Pakistan Certificates, a sharp rise from $128m in July 2024. The government has projected a total of $609m in remittances from these certificates for the current fiscal year.

The government’s ambitious $19.9bn target for foreign inflows in the current fiscal year includes $6.4bn from multilateral and bilateral sources, $400m in international bonds, $3.1bn in foreign commercial loans, and substantial contributions from strategic allies, including $5bn from Saudi Arabia in time deposits and $4bn in SAFE deposits from China.

Published in Dawn, August 26th, 2025