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EAD report shows sharp monthly decline, slight annual rise
BeNewz Report
The Ministry of Economic Affairs has reported a significant drop of $4.55 billion in foreign funding during July 2025 compared to the previous month, though year-on-year inflows increased by $260 million. The data highlights the volatility in external financing as Pakistan begins the new fiscal year.
According to the EAD monthly report, the ministry released its monthly external financing report showing that Pakistan received $694.5 million in foreign funding in July 2025. This was sharply down from $5.25 billion recorded in June 2025, but higher than the $436.4 million received in July 2024.
The breakdown shows that Pakistan obtained $675.7 million in foreign loans during July 2025, alongside $18.9 million in grants. Every year, external inflows were nearly $260 million higher compared to July 2024, suggesting a modest improvement in annual terms despite the steep monthly decline.
The report also revealed that the federal government has estimated external financing requirements of more than $19.77 billion for the ongoing fiscal year 2025-26. A large portion of this is expected to come from bilateral partners, with $9 billion in deposits projected from Saudi Arabia and China. The estimates include $5 billion in deposits from Saudi Arabia and $4 billion in “safe deposits” from China.
Analysts say the sharp month-to-month fluctuations reflect Pakistan’s reliance on short-term deposits and bilateral inflows rather than stable, long-term financing. The steep drop in July highlights the fragile nature of foreign funding at a time when Pakistan needs consistent external support to stabilize its balance of payments and meet debt obligations.
Economists warn that while the annual increase signals some improvement, Pakistan’s dependence on friendly countries for deposits raises concerns about sustainability. They argue that without reforms to boost exports, remittances, and foreign direct investment, reliance on external loans and deposits will continue to put pressure on economic stability.
The government’s financing strategy for FY2025-26 thus hinges heavily on securing deposits from allies, while managing to negotiate debt rollovers and multilateral funding. Experts stress that diversifying sources of foreign funding and improving domestic economic fundamentals are essential if Pakistan is to reduce its vulnerability to external shocks.
The July figures serve as an early indicator of the challenges Pakistan will face in meeting its ambitious $19.77 billion external financing target, underscoring the importance of steady inflows from Saudi Arabia, China, and multilateral lenders in the months ahead.
