The Foreign Economic Assistance Monthly Report for November 2024 published by the Ministry of Economic Affairs, Government of Pakistan, provides an in-depth examination of financial disbursements made against budget estimates for the fiscal year (FY) 2025.
The Report serves as a critical resource in understanding contributions of multilateral and bilateral donors, detailing grants, loans, and the allocation of funds for diverse development projects and programmes across Pakistan.
The financial data provided in the Report sheds light on the collaborative efforts and commitments of various international and domestic stakeholders toward addressing Pakistan’s developmental needs and fiscal challenges.
During the period from July to November 2024, provisional disbursements totaled US$2,667.96 million. These contributions were categorized as US$1,464.26 million from multilateral sources, US$268.80 million from bilateral sources, and US$934.90 million generated through other channels, including bonds, commercial loans, and time deposits.
This diverse inflow of funds emphasizes the strategic reliance on both traditional and innovative financial instruments to meet the nation’s economic and social development goals.
The multilateral donors played a key role in these disbursements, contributing a total of US$1,464.26 million. The Asian Development Bank (ADB) emerged as the largest donor, disbursing US$767.83 million through a combination of loans and grants aimed at supporting key sectors such as education, infrastructure, and climate resilience.
The International Development Association (IDA) followed with US$304.78 million, focusing its efforts on education, social protection programmes, and projects designed to adapt to the challenges posed by floods.
Additionally, the International Bank for Reconstruction and Development (IBRD) provided US$110.28 million, which was directed toward technical assistance and infrastructure development, while the Islamic Development Bank contributed US$119.25 million in short-term funding specifically earmarked for budgetary support.
On the bilateral front, contributions amounted to US$268.80 million received from the key players including China, which provided US$98.21 million through a combination of grants and loans for infrastructure and research projects, reflecting the strong bilateral relationship and strategic economic partnership between the two nations. Germany contributed US$16.32 million, targeting renewable energy initiatives and projects aimed at enhancing social resilience.
Similarly, the United States played a significant role, disbursing $38.25 million primarily for technical assistance and health-related projects.
The Report highlighted noteworthy projects funded during this period and emphasized the strategic use of these disbursements. For instance, the Sindh Housing Flood Reconstruction Project received US$52.02 million from the ADB, focusing on post-flood recovery and rebuilding efforts.
The National Health Support Programme, funded by IDA, was allocated US$25.09 million to enhance healthcare services across multiple provinces. Furthermore, Karachi Bus Rapid Transit Project, co-financed by Asian Infrastructure Investment Bank (AIIB) and ADB, received a substantial US$500 million to improve urban mobility, reduce congestion, and promote sustainable public transportation.
The government also utilized additional financial instruments to supplement foreign assistance, which included, bonds that generated US$1,000 million in budgetary support, foreign commercial borrowings that reachedUS$200 million, and time deposits, including contributions of US$9,000 million from Saudi Arabia and China, supported Pakistan’s foreign exchange reserves. These financial mechanisms reflect the government’s multi-pronged approach to managing fiscal needs.
The sectoral allocation of funds highlights prioritization of critical development areas and shows that infrastructure development, receiving approximately US$1,500 million, comprehended highways, water resource management, and energy projects.
Additionally, health initiatives were allocated over US$500 million, supporting programmes such as Crisis Resilient Social Protection, while education infrastructure and digital learning platforms were allocated US$150 million. These investments demonstrate a balanced approach aimed at fostering long-term socio-economic growth.
Disbursement trends for November 2024 alone reached US$937.66 million, indicating an upward trajectory compared to previous months. Cumulative disbursements for July-November period accounted for approximately 14 percent of the annual budget estimate, reflecting the efficient utilization of foreign assistance. However, challenges remain, particularly with projects reporting minimal or no disbursements and delays caused by bureaucratic inefficiencies.
The Report advocates streamlining approval processes, strengthening coordination with donors, and enhancing mechanisms to monitor fund utilization and project outcomes to address these issues.In tandem with the Foreign Economic Assistance report, the Government of Pakistan’s Annual Borrowing Plan (ABP) for FY2025 charts a comprehensive framework to meet Pakistan’s Gross Financing Needs (GFN).
The GFN for FY2025 is pegged at an enormous Rs 31,907 billion, constituting 26 percent of GDP. This includes a federal fiscal deficit of Rs 8,500 billion (7 percent of GDP) and debt maturities amounting to Rs 23,407 billion (19 percent of GDP). These figures emphasize the substantial financial obligations that Pakistan must address to stabilize its economy.
The ABP also highlights a heavy reliance on domestic financing, with 92 percent of the fiscal deficit to be funded through domestic sources such as Pakistan Investment Bonds (Rs. 5,414 billion) and Government Ijara Sukuk (Rs 2,313 billion).
Particularly, the government plans to achieve zero net issuance of Treasury Bills, opting to roll over existing maturities instead. On the external front, net inflows of US$ 2,259 million are projected, sourced from multilateral loans, commercial bank loans, and the inaugural Panda Bond issuance worth US$ 300 million.
The Medium-Term Debt Management Strategy (MTDS) FY23-FY26, ABP shows a commitment to fiscal transparency and discipline. The strategy aims to reduce Gross Financing Needs as a percentage of GDP through measures such as fiscal consolidation, reduced reliance on short-term debt, and issuance of long-term securities.
The government also plans to diversify its domestic investor base, attract retail investors, and promote Shariah-compliant instruments, including asset-light Sukuk structures and green Sukuk.
The Annual Borrowing Plan 2025 outlines the development of a Sustainable Finance Framework aimed at aligning with Sustainable Development Goals (SDGs) and addressing climate change. The government is ambitious for the issuance of green, social, or sustainability bonds in the latter part of FY25, contingent on favorable market conditions.
Though ABP provides a robust plan for managing immediate financing needs, structural reforms are essential for reducing long-term reliance on borrowing. These reforms include expanding the tax base, curbing tax evasion, diversifying exports, transitioning to renewable energy, fostering public-private partnerships, and investing in human capital development.
Moreover, improving the ease of doing business is also necessary to attract foreign direct investment and stimulate economic growth.
Pakistan’s ability to overcome its financial challenges depends on a multifaceted approach that prioritizes political stability, effective governance, and strategic international engagement. We need to focus on establishing a stable political environment that will provide the foundation for economic reforms and attract both domestic and foreign investment. Similarly, improving law and order is equally critical, ensuring a secure environment for businesses and fostering public trust in state institutions.
On the global stage, a well-defined and proactive foreign policy can unlock new economic opportunities and reinforce existing partnerships. This requires appointing experienced and energetic diplomats who can effectively advocate Pakistan’s interests, negotiate beneficial agreements, and traverse the complexities of international relations.
At the same time, fostering trust with multilateral organizations and bilateral partners will encourage greater collaboration. By aligning these efforts with structural reforms and efficient resource allocation, Pakistan can build a resilient economy that supports long-term socio-economic progress and financial sustainability.
Copyright Business Recorder, 2025
The writer is a lawyer and author of many books, and Adjunct Faculty at Lahore University of management Sciences (LUMS), member of Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE). She can be reached at [email protected]
The writer is a lawyer and author of many books, and Adjunct Faculty at Lahore University of management Sciences (LUMS) as well as member of Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE). He can be reached at [email protected]
The writer is a US-based corporate lawyer, and specialises in white collar crimes and sanctions compliance. He has written several books on corporate and taxation laws of Pakistan. He can be reached at [email protected]
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