Pakistan weighs funding mix on UAE repayment pressures

April 14, 2026 (MLN): Pakistan is weighing a broad mix of financing options, including Eurobonds, Islamic sukuk, bilateral loans and commercial borrowing, to safeguard foreign exchange reserves after pressure emerged from external debt repayments, Finance Minister Muhammad Aurangzeb said in separate interviews with Reuters and Bloomberg.

The government is considering replacing a $3.5 billion facility from the United Arab Emirates, with Finance Minister telling Reuters that “all options are on the table,” as Pakistan navigates the impact of rising oil prices and regional geopolitical tensions.

He told Bloomberg that Pakistan is “considering financing from both countries and banks” to maintain reserve stability, adding that external buffers remain adequate at roughly three months of import cover.

Reuters reported that Pakistan is preparing to repay the UAE facility this month after failing to secure a rollover, a development that adds pressure on external accounts and IMF program targets.

The finance minister said the country is actively evaluating multiple funding avenues, including Eurobond issuance, Islamic sukuk, dollar-settled rupee-linked instruments, and commercial loans.

He also indicated plans to return to global debt markets this year after a multi-year gap.

In comments to Reuters, the Finance Minister noted that the ongoing Middle East conflict has heightened the need for strategic energy planning, including consideration of petroleum reserves and a faster shift toward renewable energy sources.

He added that Pakistan’s macroeconomic stability remains intact, supported by growth projections near 4% and strong remittance inflows, while emphasizing the importance of maintaining reserve adequacy as a key policy priority.

Bloomberg reported that Pakistan remains committed to meeting debt obligations and is not currently seeking changes to its IMF program, though officials continue to monitor risks from external shocks.

The government is also preparing its first Panda bond issuance, part of a broader strategy to diversify funding sources and deepen access to international capital markets.

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