Pakistan is exploring a potential financing arrangement worth approximately $1.5 billion that would combine a World Bank policy-based guarantee with coverage from the Multilateral Investment Guarantee Agency (MIGA), as the government seeks to attract international financing on competitive terms. Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb discussed the proposal during a meeting with representatives of Alvarez & Marsal on the sidelines of the 2026 World Bank Group and International Monetary Fund Annual Meetings in Bangkok, Thailand. The proposed arrangement would depend on the available guarantee envelope and the final transaction structure. The discussions focused on using multilateral financial support to improve financing conditions, broaden investor participation and diversify Pakistan’s funding sources. The proposal remains under consideration, and no completed financing transaction was announced.
During the meeting, the finance minister welcomed further examination of ways to combine World Bank resources with MIGA guarantees to support the proposed financing. The discussions covered the possibility of linking budget support with guarantees to attract a wider pool of investors and improve the terms on which Pakistan could access funds. Aurangzeb emphasised using an existing Development Policy Operation (DPO) to facilitate progress and avoid delays that could arise from negotiating an entirely new framework. A DPO supports policy and institutional reforms through financing linked to agreed development objectives. The minister supported continued assessment of the proposal through coordination among the Finance Division, Economic Affairs Division and World Bank Group. The meeting also covered ongoing advisory work related to the proposed privatisation of electricity distribution companies, commonly known as DISCOs.
The proposed financing structure reflects Pakistan’s efforts to explore alternatives to conventional borrowing as it manages public financing requirements and seeks to improve access to international capital. Multilateral guarantees can help address selected risks associated with financing transactions and may make them more attractive to investors, depending on their terms and the obligations covered. Combining different guarantee mechanisms could potentially widen investor participation and influence the cost or maturity of financing. However, the final benefits would depend on the design of the transaction, the guarantees available and the conditions attached to the funding. Pakistan’s discussions with Alvarez & Marsal focused on examining these possibilities while making use of existing institutional arrangements where feasible.
In a separate meeting with a delegation from Lazard, Aurangzeb discussed mining investment, financing diversification and Pakistan’s sovereign credit outlook. The discussions covered several funding options, including blended finance, sustainability-linked loans, guaranteed Sukuk and debt swaps. These instruments could help diversify the government’s financing sources and potentially improve borrowing terms when structured appropriately. Blended finance combines public or development-related resources with private capital to support investment, while sustainability-linked loans connect certain financing terms to agreed performance targets. Guaranteed Sukuk can provide another route for raising funds, subject to the applicable guarantee arrangements and transaction structure. Debt swaps can also be considered as part of broader debt-management efforts, depending on the obligations involved and the terms agreed by participating parties.
Aurangzeb highlighted Pakistan’s restored access to international capital markets and discussed plans for further issuances, including Panda bonds, which are bonds issued in China’s domestic market and denominated in Chinese yuan. The finance minister emphasised the need to maintain cost discipline, align new borrowing with the government’s medium-term financing strategy and prepare transactions in advance so that Pakistan can respond when market conditions are favourable. The discussions also covered advisory support on sovereign credit ratings, policy predictability and measures to strengthen economic resilience. Both sides considered the importance of improving Pakistan’s financial position as the country seeks progress towards the BB sovereign credit rating category. Lazard proposed preparing a short note outlining its recommendations, with follow-up coordination expected through the Debt Management Office and the State Bank of Pakistan.
Aurangzeb, accompanied by the governor of the State Bank of Pakistan, also met Erin Browne, the United States Treasury Department’s Under Secretary for International Affairs, to discuss Pakistan’s economic outlook, reform agenda and external financing requirements. During the meeting, the finance minister referred to Pakistan’s $3 billion Eurobond issuance in September 2026 and outlined plans to diversify funding through Sukuk, Panda bonds and other financial instruments. Broadening the range of funding sources can help reduce reliance on individual markets or financing arrangements, although the cost and availability of funds will continue to depend on investor demand, market conditions and Pakistan’s credit profile. The discussion formed part of the government’s engagement with international financial institutions and economic partners on financing options and the implementation of its economic programme.
The finance minister also highlighted progress under Pakistan’s International Monetary Fund programme, tax reforms, three consecutive years of primary budget surpluses and foreign exchange reserves of approximately $21.6 billion, as stated during the meeting. These indicators were presented as part of the government’s efforts to demonstrate improvements in fiscal management and external stability. Primary surpluses can help limit additional borrowing requirements before interest payments, while foreign exchange reserves provide a buffer against external payment pressures. Nevertheless, maintaining these gains requires continued revenue mobilisation, expenditure management, effective debt servicing and measures to strengthen the economy’s capacity to generate foreign exchange. The discussions with US Treasury officials covered these issues in the context of Pakistan’s broader reform and financing priorities.
Regional developments and their economic implications also featured in the meeting with the US Treasury delegation. The officials discussed the effects of regional conflict on energy markets, inflation and food security, including the need to maintain adequate supplies and prepare for higher winter demand. Disruptions in energy and commodity markets can influence production costs, transportation expenses and household spending, creating additional challenges for countries dependent on imported supplies. Aurangzeb also emphasised export-led growth, stronger information technology exports and improved competitiveness in goods production as priorities for supporting economic resilience. Expanding exports can help strengthen foreign exchange earnings and reduce external financing pressures over time, provided businesses can compete effectively in international markets.
The meeting further covered privatisation, airport outsourcing, engagement with Boeing and potential financing from the Export-Import Bank of the United States. Aurangzeb expressed appreciation for continued US support while discussing opportunities to attract investment and strengthen commercial cooperation. Airport outsourcing and privatisation initiatives form part of the government’s wider efforts to improve the management of selected public-sector assets and encourage private participation. Potential US EXIM Bank financing could also be relevant to eligible transactions involving American goods and services, subject to the institution’s requirements and approval processes. No specific financing commitment or completed agreement relating to these discussions was announced in the report.
The three sets of meetings in Bangkok reflect Pakistan’s efforts to widen its financing options, attract investment and strengthen engagement with international financial institutions, advisers and government partners. The proposed $1.5 billion arrangement backed by World Bank and MIGA guarantees remains at the exploratory stage, while discussions with Lazard and US Treasury officials covered a broader range of funding instruments and economic reforms. The government’s stated priorities include maintaining fiscal discipline, improving debt sustainability, strengthening exports and pursuing reforms that could support further progress in sovereign credit assessments. The eventual impact of these initiatives will depend on the terms of any financing agreements, market conditions, investor participation and implementation of the proposed measures.
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