Foreign loan inflows rise 24pc in July-August

ISLAMABAD: Pakistan's foreign economic assistance (FEA) inflows surged nearly 24pc to $1.7 billion during July-August 2026-27, according to data from the Ministry of Economic Affairs (MEA). The total inflows, which encompassed both loans and grants, excluding the International Monetary Fund, reached $1.703 billion for the two months, up from $1.377 billion in the same period last year.

August alone saw inflows of $940 million, a 38pc increase from $680 million in August 2025-26. July's inflows totaled $764 million, also up from $697 million a year earlier.

The major contributor to the increase was a $300 million commercial loan from United Bank Dubai, along with approximately $265 million in Naya Pakistan Certificates (NPCs) contributed by overseas Pakistanis. Notably, there were no commercial loans in the first two months of FY26 due to a lack of interest from commercial banks, who had been hesitant due to economic challenges and a poor credit rating.

Inflows from overseas Pakistanis in Naya Pakistan certificates jumped by nearly 73pc to $630 million in the two months, compared to $365 million in the same period last year. This included $182 million in conventional NPCs and $448 million in Islamic NPCs, marking the first time the MEA reported these categories separately.

However, total inflows from multilateral and bilateral lenders declined by 43.24pc to $626 million from $1.103 billion the previous year. Bilateral sources witnessed an especially sharp drop, falling 85pc to $35 million from $232 million. Multilateral sources also saw a 24pc decrease to $591 million from $781 million. The government's FEA budget for 2026-27 stands at about $24 billion, up from $20 billion in 2025-26, and the MEA reported slightly over $16 billion in FY26.

Of the $1.7 billion inflows in July-August, $485 million was allocated for project financing, while non-project inflows amounted to $1.22 billion. United Bank Dubai led as the primary lender, providing $300 million, followed by the World Bank with $286 million and the Islamic Development Bank with $191 million. China emerged as the top bilateral lender with $146 million in assistance, followed by the Asian Development Bank's $97 million contribution.