Pakistan targets B+ credit rating, longer-term debt: Muhammad Aurangzeb

October 12, 2026 (MLN): Pakistan is working to extend debt maturities, diversify financing channels and strengthen its access to international capital markets as part of a medium-term debt management strategy aimed at reducing external repayment pressures and improving the country’s sovereign credit rating.

Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb said the government would not rush to raise funds from international markets during the current fiscal year, noting that Pakistan did not need immediate global borrowing to meet its external financing requirements.

Speaking to Bloomberg TV on the sidelines of the IMF and World Bank Group Annual Meetings in Bangkok, the minister said Pakistan had resumed international borrowing after a four-year hiatus, raising $750m through a private bond issuance in April and issuing $3bn in Eurobonds around three weeks ago.

The Eurobond sale received bids equivalent to twice the amount offered, attracting participation from investors across Asia, the Middle East, Europe and the United States.

Pakistan has also issued $250 million in Panda bonds under a $1bn programme, with additional issuances planned. The government has awarded mandates for Islamic Sukuk and, for the first time, dollar-payable bonds denominated in Pakistani rupees. It is also considering the digital tokenisation of existing Eurobonds.

Muhammad Aurangzeb said the government intended to replace part of its short-term external debt with longer-term obligations over the next two to three years, reducing refinancing risks without increasing the overall stock of external debt.

Pakistan’s sovereign credit rating has improved three times since April last year and currently stands in the B category. The country could reach B-plus by the start of the next fiscal year if the improvement continues, while achieving a double-B rating remains a longer-term objective, he added.

The minister said Pakistan was moving away from an aid-dependent approach towards trade and investment-led economic cooperation.

Discussions with the United States are ongoing over tariffs and a proposed framework agreement, alongside potential collaboration with the US Export-Import Bank and the International Development Finance Corporation in agriculture, information technology, minerals and mining.

Engagement with US officials has also covered possible cooperation through the Exchange Stabilization Fund, although no agreement has been finalised. Muhammad Aurangzeb said Pakistan would continue to pursue international capital market opportunities irrespective of the outcome of these discussions.

Turning to external stability, the finance minister said foreign exchange reserves had reached a record $21.4bn a few weeks ago, providing approximately three months of import cover, compared with just two weeks three years earlier.

He attributed much of the improvement to foreign exchange purchases through the market rather than additional borrowing and expressed confidence in the rupee’s stability.

Pakistan’s economic performance has also strengthened, with growth recovering from a contraction of 0.3% three years ago to 2.6% the following year and 3.7% in the last fiscal year. The government expects economic growth to exceed 4% in the current fiscal year, Muhammad Aurangzeb said.

He added that the government had met its tax collection targets during the July-September quarter, while the tax-to-GDP ratio had moved into double digits. Authorities are also monitoring the potential effects of the ongoing Middle East conflict on domestic inflation and economic growth.

On energy security, Muhammad Aurangzeb said Pakistan had managed fuel procurement since the conflict began in March without shortages or queues at petrol stations. Supplies for October’s crude oil and gas requirements had been arranged, while planning for November’s crude oil and liquefied natural gas imports was underway.

He cautioned that prolonged regional tensions could force difficult choices regarding energy procurement and the allocation of national resources, making food security equally important.

Pakistan’s existing stocks of urea and diammonium phosphate fertilizers, together with domestic production capacity, had placed the country in a relatively favourable position.

The government has also introduced targeted subsidies for vulnerable segments to cushion the economic impact of the conflict.

Muhammad Aurangzeb said Pakistan’s engagement with the US administration and its relations of trust with Iranian leadership had helped support reconciliation efforts in Islamabad.

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