Pakistan’s Development Partners
Like other developing countries around the globe, Pakistan also seeks to optimize a higher and impact-oriented investment rate in order to achieve higher and sustainable economic growth. In this regard, Pakistan’s development partners provide knowledge advisory and financial assistance to support implementation of economic reforms that will spur sustainable economic growth.
The priority of the incumbent federal government headed by Prime Minister Muhammad Shehbaz Sharif is to undertake development partners’ engagements around two key objectives: (i) achieve sustainable social and economic growth as envisioned in its development plans to reduce poverty and inequality, and to create equitable access to social services and create employment opportunities for the youth, and (ii) address the external and fiscal imbalances for enhanced macroeconomic stability.
The disbursement of Foreign Economic Assistance (FEA) remained low during the financial year 2025-26, as against budgeted figures of Rs 5777654.488 million, foreign assistance received was Rs 5024516.997 million. For the new financial year 2026-27, Pakistan was most likely to receive Rs 6779624.460 million (US $ 23.38 billion) from its development partners. Breakup-wise, Pakistan will be borrowing US $ 400.422 million (Rs 116122.423 million) from bilateral resources, US $ 4866.223 million (Rs 1411204.727 million) from multilateral resources, (US $ 235.000 million) from foreign commercial banks, US $ 12000.00 million (Rs 3480000.000 million) through bilateral deposit, US $ 1122.370 million (Rs 325487.300 million) through Naya Pakistan Certificate, and US $ 530.000 million (Rs 153700.000 million) from International Monetary Fund (IMF). Foreign assistance secured by Pakistan from its development partners also include, as usual, foreign aid for autonomous bodies such as WAPDA (Power), National Transmission and Dispatch Company (NTDC), National Highway Authority (NHA), and Power Division. Higher Education Commission (HEC) and SUPARCO were among the autonomous bodies who also received foreign assistance during the financial year 2025-26, but both of these were not among the foreign assistance beneficiaries somehow for the just commenced fiscal year 2026-27. Figures have been avoided for want of space, please.
External resources, as per information available from the official sources, are derived from a combination of financing instruments, including project loans and grants, programme loans and other loans. Project loans and grants are received from specialised International Financial Institutions and friendly countries with specific purposes; project loans and grants for Public Sector Development Programme (PSDP) are received for various projects being executed by Federal Government, Provincial Governments and various Autonomous Bodies such as WAPDA, PEPCO, NHA, etc.; there are certain projects which are kept out of PSDP and executed by Federal and Provincial Governments and Autonomous Bodies by receiving project loans and grants; programme loans are provided for budgetary support and are linked/tied with achievement of specific targets and goals; and other loans comprise of loans from Islamic Development Bank, Sovereign Bonds, Sukuk Bonds, etc. raised from non-traditional sources.
Bilateral sources included China, Denmark, France, Germany, Italy, Japan, Korea, Kuwait, Oman, Saudi Arabia, and the USA.
Multilateral sources included Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), EIB, International Bank for Reconstruction & Development (IBRD), International Development Association (IDA), International Fund for Agricultural Development (IFAD), IsDB, PEC Fund and the United Nations, and the International Monetary Fund (IMF). There was no Saudi Arabia Time Deposit and no SAFE China Deposit commitments for the financial year 2026-27.
World Bank, Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB) and IsDB were the major multilateral development partners who have conducted important diagnostic studies as well as formulated well-aligned medium-term country partnership strategies. Developments in Pakistan’s economy were also being closely monitored and rated by important rating agencies like Fitch, Moody’s and S & P which help Pakistan in accessing capital markets.
Support from development partners and international financial institutions is critical to implementing the federal government’s agenda for sustained and balanced development for the people.
The aim and objective of seeking foreign or external financial assistance can be stated as “promoting economic and social development in the developing countries.” It can also be defined as “Administered transfer of resources from a donor country or international financial agency to the developing countries with a view to encourage economic growth.”
Foreign aid can be in the form of money, goods or technical assistance and can also be between two (bilateral) or many (multilateral) countries/institutions.
Foreign aid is also looked for to meet both the economy’s balance of payments gap and investment gap. That is why project and technical assistance alone are not sufficient.