By Qudsia Bano

Budgetary support remained the largest component of foreign economic assistance received by Pakistan during the first eight months of the current fiscal year (FY26), according to official data.

The Ministry of Economic Affairs’ latest report shows that budgetary support reached about $2.18 billion during July–February FY26, accounting for the biggest share of total external inflows during the period.

The data indicates that a significant portion of foreign assistance was directed towards non-project financing, with budgetary support constituting the dominant element. This category includes inflows aimed at supporting fiscal operations, external financing requirements and other government obligations.

Within budgetary support, major contributions came from short-term and programme-based financing arrangements. Notably, financing under the Islamic Development Bank’s short-term facility for oil and LNG imports formed a substantial part of these inflows, reflecting Pakistan’s continued reliance on external support for energy-related payments.

In addition, other programme-based disbursements and financing arrangements also contributed to the overall budgetary support, highlighting the role of external partners in supporting Pakistan’s fiscal and external position.

The report shows that budgetary support was primarily provided in the form of loans, with grants accounting for a relatively smaller share. These inflows were disbursed through various mechanisms, including cash transfers, third-party payments and capitalisation, depending on the structure of the financing agreements.

A comparison of different categories of foreign assistance indicates that budgetary support exceeded project-related disbursements during the period. While project financing was directed towards development initiatives, budgetary support remained the primary channel for external inflows.

The data further reflects that non-project inflows, which include budgetary support and programme financing, accounted for a larger share of total inflows compared to project-based assistance. This highlights the importance of external financing in supporting short-term fiscal and external requirements.

The inflows were sourced from a combination of multilateral institutions, bilateral partners and other financing channels, depending on the nature of the support. Programme-based lending and short-term financing arrangements played a key role in sustaining budgetary inflows during the period.

Overall, the data shows that budgetary support remained the central pillar of Pakistan’s external financing during FY26, accounting for the largest share of foreign economic assistance received in the first eight months of the fiscal year.

Credit: INP-WealthPk