By Abdul Ghani

Pakistan relied significantly on short-term external financing instruments during the first eight months of the current fiscal year (FY26), with substantial inflows recorded under trade and deposit-based facilities, according to official data.

The Ministry of Economic Affairs’ latest report shows that short-term financing from the Islamic Development Bank (IsDB) amounted to about $483.78 million during July–February FY26. This financing was extended under trade-related arrangements to support imports of oil and LNG.

In addition to IsDB flows, Pakistan also received financing through commercial banking channels. Disbursements under a facility arranged with Standard Chartered Bank (London) reached around $200 million during the period, including $142.52 million during July–January and $57.48 million in February.

The data further shows that inflows under non-project financing channels, including instruments such as Naya Pakistan Certificates (NPCs), contributed significantly to overall external financing. Disbursements under conventional NPCs stood at about $492.29 million, while Islamic NPCs accounted for approximately $1,277.39 million during the period.

Combined, these instruments reflect a substantial share of financing raised outside traditional long-term development lending, highlighting the growing role of short-term and market-based funding sources.

The report indicates that these inflows were largely categorised under budgetary support and non-project financing, distinguishing them from project-based disbursements linked to infrastructure and development initiatives.

Short-term facilities such as the IsDB trade financing arrangement are typically used to support essential imports, particularly energy-related purchases. Similarly, commercial borrowing arrangements provide liquidity support, while NPC inflows represent funds mobilised from overseas Pakistanis.

The composition of these inflows shows that short-term and relatively flexible financing instruments formed an important part of Pakistan’s external financing mix during FY26. These sources provide quicker access to funds compared to project financing, which is tied to longer implementation timelines.

The data also reflects that these financing tools were utilised alongside multilateral and bilateral inflows, forming part of a broader external financing framework that includes loans, grants, and programme-based support.

Overall, the report highlights the increasing use of short-term external financing instruments, including trade facilities, commercial borrowing and diaspora-linked schemes, as part of Pakistan’s external financing strategy during the first eight months of FY26.

Credit: INP-WealthPk