WASHINGTON/ISLAMABAD, April 14, 2026 — Pakistan is exploring alternative financing avenues after the United Arab Emirates declined to roll over a $3 billion loan for the first time in seven years, increasing pressure on the country’s external accounts amid rising global oil prices.
Finance Minister Muhammad Aurangzeb said Islamabad is considering a mix of commercial borrowing and bilateral support to maintain foreign exchange reserves.
“Whatever we need to cover will be a combination of many sources,” Aurangzeb told Bloomberg on the sidelines of the IMF World Bank Spring Meetings 2026 in Washington. “We’re looking at all options,” he added, without providing further details.
The UAE’s decision not to extend the facility marks a departure from past practice and comes at a time when Pakistan is facing renewed external pressures due to geopolitical tensions in the Middle East, which have driven up energy import costs.
Pakistan’s foreign exchange reserves stood at $16.4 billion as of March 27, covering nearly three months of imports, according to official data. Aurangzeb said the country remains committed to meeting its external obligations and ensuring adequate reserve levels.
Prior to the recent escalation in regional tensions, the minister said Pakistan’s macroeconomic position had been improving, supported by fiscal consolidation and stable external inflows.
To bridge potential financing gaps, the government plans to tap international capital markets, including issuing Eurobonds and Islamic Sukuk after a gap of four years. Aurangzeb said Pakistan will soon invite proposals to appoint lead managers for these issuances.
In addition, the country is preparing its first-ever yuan-denominated “Panda bonds,” with an initial issuance of $250 million planned as part of a broader $1 billion programme. The bonds are expected to be backed by credit enhancement from the Asian Development Bank and the Asian Infrastructure Investment Bank.
Pakistan is also awaiting approval from the International Monetary Fund executive board for the next tranche under its $7 billion bailout programme, which could unlock around $1.3 billion, including climate-related financing.
Aurangzeb said the government is not currently seeking to expand or accelerate the IMF programme despite the oil price shock, but would engage the lender if macroeconomic risks intensify.
Analysts said the UAE’s stance underscores the need for Pakistan to diversify its funding sources and strengthen external buffers to navigate ongoing global economic uncertainty.