In 2025, Pakistan’s international relations are significantly influencing its economic landscape, presenting both opportunities and challenges. It is said that Pakistan’s international relations in this year are playing a pivotal role in shaping its economic trajectory. While strategic partnerships and foreign investments offer avenues for economic growth, they also come with financial obligations and geopolitical complexities that require prudent management.
China-Pakistan Economic Corridor (CPEC):
The CPEC continues to be a cornerstone of Pakistan’s economic strategy, with substantial Chinese investments in infrastructure and energy projects. While these projects have enhanced Pakistan’s power generation capacity, they have also led to financial obligations. Agreements with Chinese companies include terms requiring payments for unused power capacity in dollars, contributing to economic strain. Efforts are underway to renegotiate these terms to alleviate financial pressures.
Relations with the International Monetary Fund (IMF):
Pakistan secured a $7 billion loan from the IMF aimed at stabilizing its economy. The government is making progress toward meeting the IMF’s conditions, with hopes for board approval in the near future. This financial assistance is crucial for addressing Pakistan’s economic challenges, including debt obligations and fiscal deficits.
Saudi Arabia’s Investment:
Strengthening ties with Saudi Arabia have led to the signing of 27 memorandums of understanding valued at $2 billion, covering sectors such as industry, technology, and energy. These agreements are expected to boost economic activity and create employment opportunities, contributing positively to Pakistan’s economic outlook.
Relations with Russia:
Pakistan and Russia have enhanced their economic cooperation, with bilateral trade reaching unprecedented levels. The two countries signed a barter trade agreement in October 2024, aiming to circumvent Western sanctions and facilitate trade. Additionally, discussions are ongoing regarding potential LNG transactions and the establishment of a new steel mill in Karachi, indicating a deepening economic partnership.