Abdul Ghani

Out of the total US$ 10,643 million in new foreign economic assistance commitments signed during July–June 2024-25, 40% was allocated for budgetary support and balance of payments (BoP) stabilization, according to the Annual Report on Foreign Economic Assistance issued by the Ministry of Economic Affairs.

The report categorizes foreign economic assistance into four broad modes of financing: budgetary support/BoP support, program financing, project financing, and commodity financing. Each category reflects a specific financing purpose within the government’s external assistance framework.

During 2024-25, US$ 4,294 million, representing 40% of total commitments, was secured for budgetary support and BoP needs. According to the report, these funds were mobilized primarily to strengthen foreign exchange reserves and stabilize the exchange rate. Budgetary support includes financing raised from international financial institutions and capital markets to meet immediate foreign exchange and liquidity requirements.

Program financing accounted for US$ 1,551 million, or 15% of total commitments during the fiscal year. The report explains that program financing is generally obtained from multilateral development partners such as the Asian Development Bank (ADB), World Bank and other institutions to support wide-ranging economic reforms and policy-based initiatives, typically on concessional terms and with longer maturities.

Project financing constituted US$ 2,706 million, equivalent to 25% of total commitments. These funds were secured for socio-economic and infrastructure development projects across multiple sectors. Project financing supports specific development initiatives approved by competent forums such as the Central Development Working Party (CDWP) and the Executive Committee of the National Economic Council (ECNEC).

Commodity financing amounted to US$ 2,092 million, representing 20% of total commitments in 2024-25. The report states that commodity financing is primarily arranged for the procurement of crude oil under concessional oil-financing arrangements, mainly from institutions such as the Islamic Development Bank (IsDB) and the Saudi Fund for Development (SFD).

The mode-wise breakdown of commitments highlights the relative weight of stabilization-oriented financing compared to development project financing. While 25% of commitments were allocated to project financing for socio-economic development, a larger share—40%—was directed toward budgetary and balance of payments support during the fiscal year.

The report notes that new commitments are recorded after the signing of financing instruments with development partners and financial institutions, following due diligence and consultations with relevant government divisions and executing agencies.

The Annual Report on Foreign Economic Assistance 2024-25 presents this mode-of-financing breakdown as part of its overview of commitments during the fiscal year, documenting how external assistance was structured across budgetary support, program reform financing, project development and commodity procurement.

Credit: INP-WealthPk