The Finance Division of the Pakistan Government’s March Economic Outlook highlighted the volatility in oil markets due to multiple supply outages and escalating tensions between Iran and the US. The Karachi-based Business Recorder reported on the challenges posed by these factors. The International Monetary Fund (IMF) warned about the risks of external shocks to financing conditions in the Middle East and South Asia, particularly impacting countries with limited reserves like Pakistan.
The report emphasized Pakistan’s improved reserves, which stood at 16.4 billion dollars as of March 19, 2026, compared to under 3 billion dollars in 2023. However, the country still heavily relies on annual roll-overs from friendly nations and borrowing from multilaterals/bilaterals. Recent financial pressures include a 3.45 billion dollar loan recall from the United Arab Emirates and repayment of 1.4 billion dollars on maturing Eurobonds.
Pakistan’s access to foreign commercial markets has been constrained due to its fragile economy and non-investment grade rating by international agencies. Despite a rating upgrade linked to an IMF program, the country’s rating remains speculative with a risk of default. The ongoing Middle East conflict has further strained Pakistan’s economic landscape, affecting its business environment significantly.
