Aurangzeb says Pakistan has not yet requested additions or changes to its $7 billion IMF loan program due to US-Iran war
Pakistan’s Finance Minister Muhammad Aurangzeb speaks during an interview at the annual spring meetings of the International Monetary Fund and the World Bank Group in Washington DC, United States, April 13, 2026, PHOTO: REUTERS
Pakistan is considering Eurobonds, loans from other countries and commercial debt to replace a $3.5 billion facility from the United Arab Emirates (UAE) and manage its foreign exchange reserves, Finance Minister Muhammad Aurangzeb said.
Aurangzeb also told Reuters that the shock from the ongoing war in the Middle East meant Pakistan needed to consider building a strategic oil reserve and moving more quickly to renewable energy.
“All options are on the table,” Aurangzeb said when asked if the government was in talks with Saudi Arabia for a loan that could replace the UAE facility.
Reuters reported that Pakistan would return a $3.5 billion loan to the UAE this month, putting pressure on its reserves and risking failure to meet its International Monetary Fund (IMF) program targets.
Pakistan has been thrust into the international spotlight as it plays the role of mediator between the United States and Iran to end the war in the Middle East.
Aurangzeb, speaking on the sidelines of the annual spring meetings of the IMF and World Bank, said the country could manage all its debt repayments and its reserves remained at about 2.8 months of import coverage. Maintaining at least that level, he said, would be “an important aspect of our overall macroeconomic stability as we move forward.”
“We are studying Eurobonds, Islamic sukuk, dollar-settled rupee-linked bonds,” Aurangzeb said, adding that they plan to issue Eurobonds this year and are also studying commercial loans.
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Aurangzeb said that “although Pakistan has not yet requested any additions or changes to its $7 billion IMF loan program due to the economic shocks of the war in the Middle East, this is a potential option.”
“Depending on how things develop over the next few weeks, that’s something that may be discussed,” he said.
The Fund’s board is expected to approve the final loan tranche by the end of this month or early next month, Aurangzeb said, which would release just under $1.3 billion through the Expanded Financing Facility and the Resilience and Sustainability Facility.
Pakistan also plans to launch its first-ever Panda bond – debt denominated in Chinese yuan – next month, he said. The $250 million issuance, the first of a planned $1 billion program, will be supported by the Asian Development Bank and the Asian Infrastructure Investment Bank.
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Aurangzeb said expected GDP growth of nearly 4 percent, remittances of around $41.5 billion and targeted aid to poorer citizens could withstand the shock of Iran’s war this fiscal year, which ends June 30.
But the price surge means the country should focus on establishing strategic fuel and LPG reserves – rather than simply relying on commercial reserves – and accelerate its transition to renewable energy.
“When you go through a supply shock like this… it makes it very clear that we need to accelerate these trips,” he said.
