Farooq Awan

Budgetary support continued to form the bulk of Pakistan’s external inflows in the first four months of FY2025-26, with non-project aid reaching $1.52 billion between July and October 2025, according to the Monthly Disbursement Report for October 2025 available with Wealth Pakistan.

The document shows that total foreign economic assistance received by Pakistan during the period stood at $2.29 billion, out of which non-project aid accounted for roughly two-thirds. This category includes program financing and commodity aid, reflecting the government’s emphasis on securing external support for fiscal management rather than pursuing development-focused lending.

In contrast, project assistance—meant for infrastructure, energy, water, social sector, and other development schemes—stood at $773.27 million, representing around 33 percent of total inflows. This shows that development-focused external financing remained relatively limited compared to the significant demand for budgetary support during the early months of the fiscal year.

The report also breaks down the composition of these inflows, showing that loans remained the dominant mode of external assistance. Out of the $2.29 billion disbursed during July–October, $2.2 billion came as loans, while grants amounted to $50.56 million. The small share of grants—only 20 percent of total inflows—highlights Pakistan’s continued reliance on borrowed external financing.

During October 2025 alone, Pakistan received $471 million, including $461.81 million in loans and $9.39 million in grants. October’s inflows contributed about 19 percent of the cumulative receipts for the four-month period.

The document also provides the full-year allocation against which these inflows are measured. The government has budgeted $16.66 billion in non-project aid and $3.2billion in project assistance for FY2025-26. Against these allocations, non-project inflows during July–October accounted for 8.5 percent of the yearly target.

The figures indicate that although project assistance is progressing at a comparatively faster rate in percentage terms, the overwhelming share of Pakistan’s foreign inflows continues to be directed toward budgetary and balance-of-payments support, rather than long-term development financing.

The document underscores the country’s structural reliance on external program loans, with non-project inflows forming the backbone of external financing so far in the ongoing fiscal year.

Credit: INP-WealthPk