Pakistan explores USD 1.5 billion financing through World Bank guarantees

Pakistan is exploring options to raise about USD 1.5 billion in long-term financing through World Bank Group guarantees as the government seeks to diversify its external funding sources and secure financing at competitive rates, the Finance Division said Friday.

Finance Minister Muhammad Aurangzeb discussed the proposal with Alvarez & Marsal on the sidelines of the World Bank Group-International Monetary Fund annual meetings in Bangkok.

The proposed structure would combine a World Bank policy-based guarantee with coverage from the Multilateral Investment Guarantee Agency to attract financing, with a potential target of approximately USD 1.5 billion, subject to the available guarantee envelope and transaction structure.

Discussions focused on leveraging World Bank resources, combining budget support with guarantees and broadening investor participation.

How could Pakistan raise USD 1.5 billion through World Bank guarantees?

Pakistan is considering a structure that would pair a World Bank policy-based guarantee with MIGA coverage to support roughly USD 1.5 billion in long-term financing. The final amount would depend on the guarantee envelope and transaction structure, while the government is seeking competitive rates and broader investor participation.

Aurangzeb emphasized using an existing Development Policy Operation to avoid delays associated with negotiating a new framework.

He supported further exploration of the proposal by the Finance Division, Economic Affairs Division and World Bank Group.

The meeting also covered Alvarez & Marsal’s ongoing advisory work on the privatization of power distribution companies.

Pakistan discusses external financing with US Treasury

In a separate meeting, Aurangzeb and State Bank of Pakistan Governor Jameel Ahmad met US Treasury Under Secretary for International Affairs Erin Browne to discuss Pakistan’s economic outlook, reforms and external financing.

Aurangzeb highlighted Pakistan’s USD 3 billion Eurobond issuance in September and plans to diversify financing through Sukuk, Panda bonds and other instruments.

He also outlined progress under Pakistan’s IMF program and tax reforms, and highlighted three consecutive years of primary budget surpluses and foreign exchange reserves of approximately USD 21.6 billion.

The discussions covered the implications of regional conflict for energy, inflation and food security, as well as measures to maintain supplies and prepare for winter demand.

Aurangzeb said export-led growth, stronger information technology exports, improved competitiveness of goods exports and debt sustainability were priorities for supporting Pakistan’s progress toward a BB sovereign rating.

Privatization, Boeing and US EXIM financing discussed

The meeting with the US Treasury also covered Pakistan’s privatization program and the outsourcing of airport operations.

Aurangzeb discussed engagement with Boeing and potential financing from the US Export-Import Bank, according to the Finance Division.

He also expressed appreciation for continued US support.