Pakistan plans to refinance part of its short-term external debt into longer-term obligations over the next two to three years as the government seeks to reduce repayment pressures and limit the risks associated with frequent debt rollovers. Finance Minister Muhammad Aurangzeb outlined the strategy while speaking to Bloomberg News during “Bloomberg: The China Show” on Monday. He said the government intends to keep the country’s overall external debt stock close to $100 billion, focusing on improving repayment schedules rather than increasing total borrowing. The approach is designed to spread repayments over longer periods and reduce the need to repeatedly refinance liabilities as they mature.
Aurangzeb said Pakistan was not facing an immediate need to bridge its external financing gap during the current fiscal year. However, the government wants to strengthen debt management by changing the maturity profile of existing obligations and broadening its financing options. Short-term external debt can create pressure when large repayments fall due within a limited period, particularly if replacement financing becomes more expensive or access to international markets tightens. Extending maturities could help distribute these obligations over a longer timeframe, giving the government greater flexibility in managing its external payments. The finance minister emphasised that refinancing, diversification and longer repayment periods would remain central to the proposed strategy.
The government is also working to expand the range of instruments available to raise funds from domestic and international investors. Aurangzeb said mandates had already been issued for Islamic Sukuk and a new category of rupee-denominated bonds settled in US dollars. These instruments are intended to broaden the pool of potential investors and provide additional financing channels beyond conventional international borrowing. The finance minister also indicated that Pakistan was not under immediate pressure to raise funds through international bond markets during the current fiscal year. This gives the government an opportunity to pursue its financing plans while concentrating on the structure and cost of its debt rather than responding to an urgent funding requirement.
Pakistan is preparing to issue requests for proposals for the remaining planned Panda bonds, which would enable the country to raise funds in China’s domestic bond market. Accessing this market could help diversify Pakistan’s investor base and reduce dependence on a narrower set of financing sources. The government is also exploring the possibility of tokenising its existing Eurobonds, an initiative that could introduce a digital mechanism for representing these securities. The proposal remains under consideration, and further details on its structure and implementation were not provided in the reported remarks. Together, these initiatives form part of a broader effort to expand access to capital markets and develop alternative channels for managing external financing requirements.
Aurangzeb’s comments came as he led Pakistan’s delegation to the World Bank Group and International Monetary Fund (IMF) Annual Meetings in Bangkok, Thailand, scheduled for October 12 to 18. He departed for the visit on October 10 for a programme comprising more than 60 engagements with international financial institutions, policymakers, development partners, investors, banks and credit rating agencies. The meetings are intended to discuss Pakistan’s economic outlook, reform agenda, financing requirements and efforts to attract private-sector investment. Engagement with international partners also provides an opportunity to explain the government’s debt management priorities and its plans to strengthen economic stability.
During the visit, the finance minister is scheduled to meet senior officials from the IMF and World Bank Group, including representatives of the International Finance Corporation and the Multilateral Investment Guarantee Agency. Discussions are expected to cover structural reforms, private investment and Pakistan’s wider economic outlook. Aurangzeb is also due to engage with representatives of the Asian Infrastructure Investment Bank, Saudi Fund for Development, OPEC Fund for International Development, International Islamic Trade Finance Corporation and Japan International Cooperation Agency. Bilateral meetings are planned with finance and economic officials from Saudi Arabia, China, Türkiye, Iran, the United Kingdom, Thailand and the United States.
Engagement with international banks and investors is another part of the programme. The finance minister is scheduled to meet representatives of institutions including JP Morgan, Citi, Deutsche Bank, Standard Chartered, Barclays and Bank of America, alongside other financial firms. Meetings are also planned with Fitch Ratings, Moody’s and S&P Global, the three major international credit rating agencies. These discussions are expected to address Pakistan’s economic performance, reform programme and progress towards macroeconomic stabilisation. Investor confidence and the country’s ability to access financing on sustainable terms remain relevant to the government’s plans to extend debt maturities and diversify funding sources.
According to the Finance Division, the visit aims to strengthen Pakistan’s engagement with international lenders and investors while highlighting progress on economic reforms. The government is also seeking to move towards investment- and export-led growth, attract private capital, improve financial inclusion and expand employment opportunities. The proposed external debt refinancing strategy fits within this broader agenda by seeking to reduce the concentration of repayments without increasing the overall debt stock. Its effectiveness will depend on the terms available for replacement financing, investor demand and the government’s ability to manage future obligations within its broader fiscal and external financing plans.
Pakistan’s plan therefore centres on changing when and how its external debt is repaid, rather than pursuing a larger borrowing target. Maintaining external debt near $100 billion while shifting some short-term liabilities into longer maturities could help reduce rollover risks and provide more predictable repayment schedules. The proposed Sukuk, dollar-settled rupee bonds, Panda bonds and possible Eurobond tokenisation also indicate an effort to diversify the country’s financing channels. The government has outlined its direction, but the final scale, timing and terms of these measures will determine how much they improve Pakistan’s debt management position over the next two to three years.
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