Pakistan’s Foreign Financing Rises 24% to $1.7 Billion in First Two Months of FY27

Pakistan received approximately $1.70 billion in foreign economic assistance during July and August 2026, marking a nearly 24% increase compared with the same period last year as commercial borrowing resumed and overseas Pakistanis increased investment through Naya Pakistan Certificates.

Foreign financing during the first two months of FY2026-27 reached $1.703 billion, compared with approximately $1.377 billion during July-August FY26.

The figures exclude financing from the International Monetary Fund (IMF) and include loans, grants, commercial borrowing and Naya Pakistan Certificate inflows reported by the Economic Affairs Division.

While the headline figure shows a strong year-on-year increase, the composition of the financing is equally important: traditional bilateral and multilateral inflows declined, while commercial borrowing and Naya Pakistan Certificates accounted for much of the increase.

Pakistan Receives $1.7 Billion in Two Months

Total foreign economic assistance reached $1.703 billion during July-August FY27.

That represents an increase of approximately 23.6% year-on-year.

August was particularly strong, with total external financing reaching approximately $939.5 million, compared with about $764 million received in July.

The increase means Pakistan entered the new fiscal year with higher external financing than during the corresponding period of FY26.

However, higher foreign financing should not automatically be interpreted as higher foreign investment.

Much of the amount consists of loans and other financing instruments that ultimately create repayment obligations or associated financing costs.

Commercial Borrowing Returns With $300 Million Loan

One of the biggest changes compared with last year was the return of foreign commercial borrowing.

Pakistan received a $300 million commercial loan from UBL Dubai during August.

There had been no comparable commercial-bank borrowing during the first two months of the previous fiscal year.

The return of commercial financing is significant because Pakistan’s access to international commercial lenders had been constrained during periods of elevated economic and credit risk.

Commercial borrowing can provide the government with additional foreign currency relatively quickly, but its cost and repayment terms are important when assessing its long-term impact.

Naya Pakistan Certificates Bring in Nearly $630 Million

Naya Pakistan Certificates were another major source of external financing.

Pakistan received approximately $629.76 million through Naya Pakistan Certificates during July-August FY27.

Of this amount:

• $182.24 million came through conventional Naya Pakistan Certificates.
• $447.52 million came through Islamic Naya Pakistan Certificates.

Combined NPC inflows therefore represented more than a third of the $1.703 billion in external financing recorded during the two-month period.

Compared with approximately $365 million during the same period last year, NPC inflows increased by roughly 73%.

Naya Pakistan Certificates allow eligible overseas Pakistanis to invest foreign currency in government-issued instruments through Roshan Digital Accounts.

Multilateral Financing Reaches Nearly $591 Million

Pakistan also continued receiving financing from major international development institutions.

Multilateral loans and grants totalled approximately $590.96 million during July-August.

Major contributors included:

The World Bank’s International Development Association was therefore one of Pakistan’s largest multilateral financing sources during the opening two months of FY27.

Bilateral Financing Drops Sharply

A notable feature of the latest numbers is the decline in traditional bilateral financing.

Excluding separately reported guaranteed Chinese financing, bilateral development partners provided approximately $35.2 million during July-August.

Major bilateral contributions included:

• Germany — approximately $12.87 million
• Saudi Arabia — approximately $8.90 million
• France — approximately $8.52 million
• Denmark — approximately $3.15 million
• Japan — approximately $1.71 million
• United States — approximately $0.08 million

The overall bilateral figure was significantly lower than during the same period last year.

This reinforces an important point about the headline 24% increase: Pakistan received more total external financing, but the increase was not broad-based across every financing source.

China Provides $146.6 Million in Guaranteed Financing

China accounted for another significant portion of financing during the period.

Approximately $146.62 million in guaranteed Chinese financing was recorded during July.

No additional Chinese disbursement was reported for August.

China remains an important external financing partner for Pakistan, particularly through government-backed lending and infrastructure-related financing.

However, monthly disbursements can fluctuate considerably depending on project schedules, refinancing arrangements and loan agreements.

Project Financing Stands at Around $485 Million

Of Pakistan’s $1.703 billion in total foreign economic assistance, approximately $484.6 million was associated with project financing.

The remaining approximately $1.218 billion was classified as non-project financing.

This distinction matters.

Project financing is generally linked to specific development activities such as infrastructure, energy, water, transport, education or other approved programmes.

Non-project financing can include budget support, commercial borrowing, short-term facilities and other financing used more broadly by the government.

The large share of non-project financing therefore shows that the increase was not primarily the result of a surge in funding for new infrastructure projects.

Why Did Foreign Financing Increase?

Three factors explain much of the year-on-year improvement.

1. Commercial Loans Returned

The $300 million UBL Dubai loan provided a source of financing that was absent during the corresponding period last year.

2. Naya Pakistan Certificate Inflows Increased

NPC inflows climbed to almost $630 million, significantly higher than the approximately $365 million recorded during the first two months of FY26.

3. Stronger August Disbursements

Pakistan received approximately $939.5 million in August alone, lifting the cumulative two-month figure substantially.

Together, these factors outweighed the decline in bilateral and multilateral development financing.

Pakistan Has a Much Larger FY27 External Financing Target

The two-month inflow needs to be viewed against Pakistan’s financing requirements for the full fiscal year.

The government has budgeted for approximately $24 billion in foreign economic assistance during FY2026-27.

That target is substantially higher than the amount received during the first two months.

Pakistan had targeted around $20 billion in foreign assistance during FY26 but ultimately mobilised considerably less than the original target.

This means the pace of financing during the remaining months of FY27 will be important for the government’s external funding plans.

Foreign Loans Are Different From Foreign Investment

Foreign loans, grants and foreign direct investment are often discussed together when assessing Pakistan’s external accounts, but they represent very different types of inflows.

Foreign direct investment generally represents overseas investors acquiring or establishing productive assets in Pakistan.

Foreign borrowing, by contrast, normally creates a repayment obligation.

Naya Pakistan Certificates also involve government liabilities because investors expect repayment of their principal along with the applicable return.

Therefore, the increase to $1.7 billion improves the availability of external financing but also needs to be assessed alongside Pakistan’s external debt, repayment schedule and cost of borrowing.

Why External Financing Matters for Pakistan

Pakistan requires foreign currency for several purposes, including servicing external debt, paying for imports and maintaining adequate foreign-exchange reserves.

External financing can help bridge the gap when foreign-exchange earnings from exports, remittances and other sources are insufficient to meet all external obligations.

Development loans can additionally finance infrastructure and social-sector projects.

The challenge is ensuring that borrowing remains sustainable.

Financing that supports productive investment capable of generating economic returns can have a different long-term impact from borrowing used primarily to meet short-term budget or balance-of-payments requirements.

Key Numbers From July-August FY27

What to Watch During the Rest of FY27

Pakistan’s external financing performance during the remainder of FY27 will depend on several factors.

These include disbursements from the World Bank, Asian Development Bank and Islamic Development Bank; access to international commercial financing; continued investment in Naya Pakistan Certificates; bilateral support; and progress under Pakistan’s broader economic programme.

The cost of new borrowing will be just as important as the amount raised.

If Pakistan continues regaining access to commercial financing, it could expand the government’s external funding options. However, greater commercial borrowing also means policymakers must carefully manage interest costs and future repayments.

The first two months of FY27 therefore show an improvement in Pakistan’s ability to attract external financing, but the composition of those inflows remains important.

The headline 24% increase to $1.7 billion was driven substantially by commercial borrowing and Naya Pakistan Certificates rather than a broad increase across traditional development lenders.