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, US, 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 impact of the ongoing war in the Middle East means Pakistan must consider a strategic oil reserve and a faster shift 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 service.
Reuters reported that Pakistan will repay a $3.5 billion loan to the United Arab Emirates this month, putting pressure on its reserves and risking missing the targets of its International Monetary Fund (IMF) program.
Pakistan has been put in the international spotlight for playing 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 debt payments and its reserves remained at about 2.8 months of import cover. Maintaining at least that level, he said, would be “an important aspect of our overall macroeconomic stability as we move forward.”
“We are looking at Eurobonds, we are looking at Islamic sukuk, we are looking at rupee-linked bonds settled in dollars,” Aurangzeb said, adding that they hoped to issue Eurobonds this year and are also exploring commercial loans.
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Aurangzeb said that while Pakistan had not yet requested any addition or change to its $7 billion IMF lending program due to economic crises from the war in the Middle East, it was a potential option.
“Depending on how things develop in the next few weeks, that’s something that can be discussed,” he said.
The Fund’s board is likely to approve the final tranche of loans later this month or early next, Aurangzeb said, which would unlock just under $1.3 billion through the Expanded Fund Facility and the Resilience and Sustainability Facility.
Pakistan also hopes to launch its first 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 backed by the Asian Development Bank and the Asian Infrastructure Investment Bank.
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Aurangzeb said the country’s expected GDP growth of close to 4%, remittances of around $41.5 billion and targeted assistance to the poorest citizens could withstand the shock of the Iran war for this fiscal year, which ends June 30.
But price increases meant the country should focus on establishing strategic fuel and LPG reserves – rather than simply relying on commercial reserves – and accelerate its move towards renewable energy.
“When you go through a supply shock like this… it sends a very clear vision that we need to accelerate these trips,” he said.
