Finance Minister Muhammad Aurangzeb says the government aims to diversify financing sources, strengthen foreign reserves and improve Pakistan’s sovereign credit rating.
Pakistan is developing a medium-term debt management strategy to reduce external repayment pressures, extend borrowing maturities and broaden access to international capital markets, Finance Minister Muhammad Aurangzeb said on Monday.
In an interview with Bloomberg TV on the sidelines of the IMF and World Bank Group Annual Meetings in Bangkok, Aurangzeb said the government would avoid rushing into international borrowing during the current fiscal year, as Pakistan did not need additional global financing to meet its external requirements.
Pakistan Expands International Borrowing Options
Aurangzeb said Pakistan had re-entered international capital markets after a four-year gap, issuing $750 million in bonds privately in April and $3 billion in Eurobonds approximately three weeks ago. The Eurobond offering received bids worth twice the amount offered, attracting investors from Asia, the Middle East, Europe and the United States.
Pakistan has also issued $250 million in Panda bonds under a $1 billion programme. Further issuances are planned, while the government has awarded mandates for Islamic Sukuk and rupee-denominated bonds payable in dollars. Authorities are also considering digital tokenisation of existing Eurobonds.
The finance minister said Pakistan intended to convert some short-term external debt into longer-term obligations over the next two to three years without increasing its overall external debt stock.
Sovereign Rating Improvement Remains a Priority
According to Aurangzeb, Pakistan’s sovereign credit rating has improved three times since April last year and currently stands in the B category. The government hopes to reach B-plus by the beginning of the next fiscal year, with entry into the double-B category remaining a longer-term objective.
He said Pakistan was shifting its economic approach from aid dependence towards trade and investment. Discussions with the United States cover tariffs, a potential framework agreement and cooperation through the US Export-Import Bank and the International Development Finance Corporation in agriculture, information technology, minerals and mining.
Foreign Reserves and Economic Growth Improve
Aurangzeb said Pakistan’s foreign exchange reserves had reached a record $21.4 billion a few weeks earlier, providing approximately three months of import cover. He attributed much of the improvement to foreign currency purchases through the market rather than additional borrowing.
Economic growth has recovered from a contraction of 0.3% three years ago to 2.6% and then 3.7% in the previous fiscal year. The government expects growth to exceed 4% during the current fiscal year.
He added that tax collection targets were achieved in the July-September quarter, while the tax-to-GDP ratio had moved into double digits.
Energy Security and Inflation Remain Under Watch
The government is monitoring the economic impact of Middle East tensions, particularly inflation, energy costs and growth. Aurangzeb said Pakistan had avoided fuel shortages since the conflict began in March, with October energy requirements arranged and procurement planning for November underway.
He cautioned that prolonged regional tensions could require difficult decisions regarding energy supplies and resource allocation. However, existing urea and diammonium phosphate stocks, combined with domestic production capacity, have supported the country’s fertiliser supply position.
The minister added that targeted subsidies had been introduced to protect vulnerable groups from economic pressures, while Pakistan continued diplomatic engagement with the United States and Iran to support regional reconciliation.