Pakistan has completed another major step in meeting the International Monetary Fund’s program requirements by implementing a policy to extend the maturity timelines for both domestic and external debt. The adjustment aims to ease future financing pressures, stabilize debt repayments, and align the country’s debt management strategy with the IMF’s structural benchmarks.
According to official sources, the revised plan increases the average maturity period for domestic loans from the current 3 years and 8 months to 4 years and 3 months. For external loans, the maturity period will be extended from 6 years and 1 month to 6 years and 3 months. The IMF has set 2028 as the deadline for full implementation, ensuring that the policy’s benefits are realized over the medium term.
This reform is expected to help Pakistan reduce its financing needs in coming years, creating fiscal space for priority spending and reducing rollover risks. The government is preparing a formal report on the progress, which will be submitted to the IMF mission ahead of the next economic review.
Implementation will begin in the current fiscal year, with adjustments being made to align ongoing borrowing practices with the updated strategy. Officials confirm that, under the new policy, 30 percent of domestic loans will meet the IMF’s “average time to refix” requirement. This change is designed to create a more stable debt structure, less vulnerable to abrupt interest rate changes.
A significant component of the plan is the shift toward more fixed-rate borrowing. Around 30 percent of new domestic loans will be issued at fixed policy rates, helping shield public finances from rate volatility in both domestic and international markets.
The policy also integrates a diversification measure aimed at expanding the share of Shariah-compliant financing to 20 percent over the next three years. By increasing the proportion of Islamic finance instruments in its debt portfolio, the government aims to attract a broader investor base and enhance financial stability.
In managing external debt, the government plans to cap foreign loans at no more than 40 percent of the total debt stock. This measure is intended to ensure that external borrowing remains within sustainable levels, mitigating risks from currency fluctuations and external shocks.
The IMF has stressed the importance of timely execution and transparency in applying the changes. Pakistan has formally committed to beginning the process without delay, with a compliance report set to be presented before the next review.
While this reform addresses one of the IMF’s key program conditions, economic experts note that broader fiscal consolidation, structural reforms, and stronger revenue measures will be essential to sustaining debt stability in the long run. Nonetheless, the extension of loan maturities represents a meaningful step toward easing near-term repayment pressures and reinforcing Pakistan’s economic resilience.