By Abdul Ghani
Pakistan is leaning heavily on borrowed money as Pakistan foreign loans 2025 dominate its economic support. During the first four months of the current fiscal year, nearly 80 percent of the country’s foreign economic assistance came in the form of loans, with total inflows reaching $2.29 billion from July to October 2025, according to the Monthly Disbursement Report for October 2025.
Pakistan foreign loans 2025 dominate early fiscal year inflows
The report shows that Pakistan received $2.29 billion in loans while grants made up only $50.56 million. This stark difference highlights the country’s dependence on borrowed funds to meet fiscal and external needs.
Grants remain a small part of the total, reflecting a long-standing trend where non-repayable aid is limited compared to loan-based support.
Grants remain a small portion of total foreign aid
Non-project assistance took the largest share of funds, totaling $1.52 billion in the first four months. This category mainly includes budget support and commodity aid, mostly delivered as program loans.
Project assistance, meanwhile, accounted for $773.27 million, roughly a third of the total inflows over this period.
Non-project assistance takes the lead in funding
October 2025 alone brought in $471.20 million, with $461.81 million in loans and $9.39 million in grants. These October receipts made up nearly 19 percent of the four-month cumulative foreign aid.
Project assistance shows faster progress by percentage
The report also outlines the federal government’s full-year external financing plan for FY2025-26, totaling $19.92 billion, with $19.77 billion in loans and $147.9 million in grants.
By October, loan disbursements had reached 12.28 percent of the annual target, while grants had reached 8.15 percent of their full-year allocation.
Loans remain crucial for budget and balance of payments
Project assistance, despite being smaller overall, is progressing faster in terms of percentage. Receipts under project aid reached 29.2 percent of the yearly target, while non-project aid reached only 8.5 percent of its much larger allocation.
These figures show that Pakistan’s foreign financing relies mainly on loans. Most of the money is used to support the government’s budget and stabilize the balance of payments.
With grants making up only a small portion, future repayment obligations remain a major concern, as loans form the backbone of foreign assistance in this period.
Author Profile
-
Abdul Ghani is a sharp analyst focused on Pakistan's industrial transformation. His reporting reveals the textile sector's pivot from basic cotton to high-growth value-added apparel.
Ghani's work underscores the triumph of knitwear and garments in boosting exports, while warning policymakers to tackle energy costs to secure long-term global competitiveness.
