ISLAMABAD: Pakistan is looking to raise up to $2 billion through Eurobonds this fiscal year as it prepares to return to international capital markets and seeks US financing to bolster investor confidence, Finance Minister Muhammad Aurangzeb has said in an interview published in a foreign publication on Tuesday.
The planned borrowing marks an effort by Islamabad to diversify its sources of external financing after years of heavy reliance on bilateral and multilateral creditors, while rebuilding foreign exchange reserves and stabilizing public finances under a $7 billion International Monetary Fund program.
Aurangzeb said the timing of the Eurobond issuance would depend on market pricing and maturity conditions, but that Pakistan was “looking at $1bn-$2bn” during the current fiscal year, which ends in June 2027.
Pakistan last month appointed a consortium of banks with a three-year mandate to arrange Eurobond issuances, alongside separate groups for Islamic sukuk and rupee-denominated, dollar-settled bonds, the Financial Times reported.
Islamabad is also seeking a $10 billion currency swap line from Washington, which Aurangzeb said was intended to serve as “a confidence signal” to private investors as Pakistan seeks to deepen trade and investment ties with the United States.
“It’s a combination of engagement with the US primarily to focus on trade and investment flows, and to help signalling with respect to international capital markets,” he told the UK-based publication.
The minister said Pakistan had received “constructive engagement” from Washington over the proposed swap arrangement and hoped for a response “in the next couple of months.”
He also pointed to a “very important role” for the Export-Import Bank of the United States and the US International Development Finance Corporation (DFC), saying the two institutions had shown “risk appetite for Pakistan.”
Aurangzeb said the US ExIm Bank could potentially finance Boeing aircraft purchases by the recently privatized Pakistan International Airlines and support US companies involved in upgrading Pakistani oil refineries, while the DFC could take equity stakes in Pakistani conglomerates.
Pakistan is also planning to tap Chinese capital markets through a $750 million renminbi-denominated panda bond issuance, which Aurangzeb described as “very, very significant” given the scale of China’s domestic market.
The finance minister said Pakistan was not currently seeking additional financing from China but said closer engagement with Washington did not amount to a choice between the two powers.
He said the choice between the United States and China was “not an and-or discussion.”
China remains Pakistan’s largest foreign creditor, accounting for 23 percent of its $129.7 billion in outstanding external debt in 2024, according to World Bank figures cited by the Financial Times.
Pakistan has repeatedly turned to bilateral partners and the IMF to meet external financing needs during balance-of-payments crises, but Aurangzeb has said the government wants to shift the economy away from aid and toward trade, investment and market-based financing.
Pakistan’s macroeconomic indicators have improved under the IMF program approved in 2024, with inflation falling, reserves recovering and fiscal deficits narrowing, though economic growth remains modest.
The government estimates growth at 3.7 percent for the fiscal year that ended in June, while the trade deficit widened to a four-year high of $39.5 billion and exports declined.
Aurangzeb said Islamabad wanted to avoid returning to consumption-led growth that rapidly increases imports and strains foreign exchange reserves.
“If you look at our last episode where we put the foot on the pedal by pumping liquidity, going for consumption-led growth ... we get into trouble very quickly because we are an import-dependent economy,” he said. “So we’re keeping a very close eye on that ... [on] more export-led growth.”
Pakistan’s ability to return to international borrowing has also been supported by recent sovereign rating upgrades.
S&P last month raised Pakistan’s rating to B, five notches below investment grade, while Fitch rates the country one notch lower at B-minus with a stable outlook.
“At this point we are working with the rating agencies to get back to B plus over the next 12 months or so,” Aurangzeb said. “But our aim is to at least look at double B and work back from there.”
“And there is no reason why we cannot get there.”
