The International Monetary Fund (IMF) has projected that Pakistan will need more than $115 billion in external financing over the next five years to meet its economic obligations. This estimate includes $19.3 billion for the fiscal year 2025–26, escalating to $31.35 billion by 2027–28, the peak of the period. Subsequent years will require $23.13 billion in 2028–29 and $22.16 billion in 2029–30 .
Debt Servicing and External Vulnerabilities
While recent policy measures have slightly improved Pakistan’s debt servicing outlook, the IMF warns that external vulnerabilities persist. The country’s capacity to repay debts is fragile, heavily dependent on timely external financing and the consistent implementation of economic reforms . The IMF cautions that any escalation of tensions with neighboring countries, reversal of economic reforms, or politically motivated subsidies could jeopardize the fragile macroeconomic stability achieved so far.
Challenges in Accessing Commercial Loans
The IMF notes that Pakistan’s ability to access commercial loans in the upcoming fiscal year will remain constrained, with only $85 million expected from new commercial borrowing. The availability of global financing avenues such as Eurobonds is likely to remain out of reach unless the country’s credit rating sees a significant improvement, possibly enabling access by 2027 .
Multilateral and Bilateral Contributions
To bridge the financing gap, Pakistan anticipates support from multilateral and bilateral partners. The IMF estimates that multilateral disbursements will reach $14 billion over FY25–28, including $7.1 billion from the World Bank and $5.6 billion from the Asian Development Bank. Key bilateral creditors are expected to maintain their exposure through new financing activities. However, the World Bank will not be providing any budget support in the next fiscal year, and the Asian Development Bank may contribute $250 million.
Outlook on Current Account Deficit
The IMF forecasts a relatively small current account deficit of $1.5 billion for FY26, down significantly from earlier estimates. For the ongoing fiscal year (2024–25), the deficit is now expected to narrow to just $229 million—a sharp revision from the previous projection of $3.6 billion. This improvement in the external account has led to optimism regarding the buildup of foreign exchange reserves. However, the IMF cautioned that risks to this outlook remain, particularly in light of recent U.S. tariff measures, which could negatively impact Pakistan’s exports and GDP growth .
Pakistan’s economic stability hinges on securing substantial external financing and implementing comprehensive structural reforms. The IMF’s projections underscore the urgency for Pakistan to enhance its fiscal discipline, governance, and external relations to meet its financial obligations and foster sustainable economic growth.
