Pakistan targets return to global bond markets with up to $2bn borrowing

Pakistan plans to return to international capital markets this fiscal year with an initial borrowing target of $1 billion to $2 billion, Finance Minister Muhammad Aurangzeb told the Financial Times, as the government seeks to cut its reliance on bilateral financing and shift the economy towards trade and investment.

How much is Pakistan planning to borrow from global bond markets?

Pakistan is targeting $1 billion to $2 billion in international borrowing during the current fiscal year. The government has appointed banking consortiums, including Standard Chartered and Citi, to arrange Eurobond, Islamic sukuk and rupee-denominated, dollar-settled bond issues as part of the plan.

Aurangzeb said the timing and size of a Eurobond issue would depend on market pricing and the maturity offered. Pakistan also plans to appoint a consortium to arrange $750 million of renminbi-denominated "panda" bonds, which Aurangzeb described as "very, very significant," citing the scale of China's capital markets.

Why is Pakistan seeking a $10 billion swap line from the US?

Aurangzeb said Pakistan was also seeking a $10 billion swap line from the United States as a "confidence signal" to international investors as Islamabad prepares to resume external bond issuance. He said Washington had engaged "constructively" on the proposed arrangement and that Pakistan expected a response "in the next couple of months."

The finance minister said the US Export-Import Bank and the US International Development Finance Corporation (DFC) could also play an important role in supporting Pakistan's investment and economic agenda. "It's a combination of engagement with the US primarily to focus on trade and investment flows, and to help signaling with respect to international capital markets," Aurangzeb said.

He said the Exim Bank could potentially finance Boeing aircraft sales to Pakistan International Airlines following the carrier's privatization, as well as support US companies looking to upgrade Pakistan's oil refineries. The DFC, meanwhile, could participate through equity investments in Pakistani conglomerates, he said.

Why is Pakistan focusing on export-led growth?

Aurangzeb said Pakistan needed to move away from consumption-driven growth and focus more heavily on exports to avoid repeated balance-of-payments crises. Pakistan's trade deficit widened to a four-year high of $39.5 billion in fiscal 2026, while exports declined, according to the report.

"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," Aurangzeb said. "So we're keeping a very close eye on that, more export-led growth."

Pakistan has been working to stabilize its economy under a $7 billion, three-year International Monetary Fund program approved in 2024. The government estimates that GDP grew 3.7% in the fiscal year ended June 30, 2026.

Is Pakistan choosing between the US and China?

Aurangzeb, a former Citibank and JPMorgan executive who also headed Pakistan's Habib Bank, said the government's broader objective was to move the country "from aid to trade and investment." He said stronger ties with Washington should not be viewed as a choice between the United States and China, describing the relationship as "not an and-or discussion."

China remains Pakistan's largest bilateral creditor, accounting for about 23% of the country's $129.7 billion in total outstanding external debt in 2024, according to World Bank data. Aurangzeb nevertheless confirmed that Pakistan was not currently seeking additional financing from China.

The government is also seeking to capitalize on stronger political ties between Islamabad and Washington. Pakistan's military chief, Field Marshal Asim Munir, has developed close ties with US President Donald Trump and helped facilitate diplomatic efforts involving Iran.

What credit rating is Pakistan targeting?

Pakistan is seeking further upgrades to its sovereign credit ratings to lower borrowing costs and broaden access to international investors. S&P Global Ratings upgraded Pakistan's sovereign rating to B last month, five notches below investment grade, while Fitch Ratings currently rates Pakistan 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."

The government hopes stronger foreign exchange reserves, fiscal consolidation, improved external balances and greater access to private capital will help Pakistan move towards more sustainable, market-based financing while supporting investment and export growth.