The International Monetary Fund (IMF) has projected that Pakistan will require more than $115 billion in external financing over the next five years.

In its latest report on Pakistan’s external financing needs, the IMF highlighted that the country would need $19.3 billion in external funds in the next fiscal year (2025-26) alone.

The requirement is expected to rise to $19.75 billion in 2026-27, followed by $31.35 billion in 2027-28 — the highest over the five-year period. For the subsequent years, Pakistan would need $23.13 billion in 2028-29 and $22.16 billion in 2029-30.

The IMF said while Pakistan’s debt servicing outlook has somewhat improved due to recent policy measures and reform commitments, external vulnerabilities remain. The report warned that any escalation of tensions with India, reversal of economic reforms, or politically motivated subsidies could endanger the fragile macroeconomic stability achieved so far.

The Fund noted that Pakistan’s ability to access commercial loans in the upcoming fiscal year would 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.

Of the $19.3 billion external financing need projected for FY26, approximately $17 billion is expected to be secured through new loans and rollovers from bilateral partners, leaving a financing gap of $2.4 billion.

Multilateral and bilateral contributions

According to the IMF, Saudi Arabia is expected to provide $800 million annually in oil financing facilities, while Pakistan plans to tap into the Chinese market through the issuance of Panda Bonds worth $400 million next year. Climate financing of around $410 million is also projected during the same period.

However, the report confirms that the World Bank will not be providing any budget support in the next fiscal year. The Asian Development Bank (ADB) may contribute $250 million, the Fund added.

Balance of payments, current account outlook

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.

The improvement in the external account has given rise to optimism regarding the buildup of foreign exchange reserves. However, the IMF cautioned that risks to this outlook remain, particularly in light of recent US tariff measures, which could negatively impact Pakistan’s exports and GDP growth.