IMF Projects Pakistan’s External Financing Need at Over $115 Billion in Five Years
Islamabad — The International Monetary Fund (IMF) has projected that Pakistan will require more than $115 billion in external financing over the next five years to support its economy and debt obligations.
In its latest report on Pakistan’s external financing needs, the IMF estimated that Pakistan will need $19.3 billion in external funds in the fiscal year 2025-26 alone. This figure is expected to rise to $19.75 billion in 2026-27, with a peak requirement of $31.35 billion in 2027-28. For the fiscal years 2028-29 and 2029-30, the external financing needs are projected at $23.13 billion and $22.16 billion, respectively.
The IMF highlighted that although recent policy measures and economic reforms have somewhat improved Pakistan’s debt servicing outlook, significant external vulnerabilities persist. The report warned that any escalation of tensions with India, reversal of reforms, or politically driven subsidies could undermine the fragile macroeconomic stability achieved so far.
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Regarding commercial borrowing, the IMF noted that Pakistan’s access to new loans will remain limited in the upcoming fiscal year, with only about $85 million expected from commercial sources. The country’s ability to tap global financial markets, including Eurobonds, will likely remain restricted unless there is a substantial improvement in Pakistan’s credit rating—potentially by 2027.
Of the $19.3 billion financing need for FY26, the IMF expects around $17 billion to be met through new loans and rollovers from bilateral partners, leaving a funding gap of $2.4 billion.
Multilateral and Bilateral Support
The report anticipates annual oil financing of $800 million from Saudi Arabia, while Pakistan aims to raise $400 million via Panda Bonds in the Chinese market next year. Additionally, about $410 million is expected from climate financing.
However, the IMF confirmed that the World Bank will not provide any budget support in the next fiscal year. The Asian Development Bank (ADB) may contribute $250 million toward Pakistan’s financing needs.
Balance of Payments and Current Account Outlook
The IMF forecasts a current account deficit of $1.5 billion for FY26, a significant improvement from earlier estimates. For the ongoing fiscal year 2024-25, the deficit is now projected at a modest $229 million, sharply revised down from the previous estimate of $3.6 billion.
This positive outlook on Pakistan’s external account has sparked optimism about a buildup of foreign exchange reserves. Still, the IMF cautioned that risks remain, especially due to recent US tariff measures that could adversely affect Pakistan’s exports and overall GDP growth.
