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Islamabad had sought the $10-billion Exchange Stabilisation Support Facility from Washington in July.
Finance Minister Muhammad Aurangzeb met US Treasury Secretary Scott Bessent in Washington as Pakistan’s proposed $10-billion liquidity support facility remained uncertain. (IMAGE: X)
Pakistan this week secured a three-billion-dollar financing rollover from Saudi Arabia, easing an immediate external financing pressure even as prospects of a proposed $10-billion liquidity support facility from the United States appear to have weakened.
Finance Minister Muhammad Aurangzeb confirmed on Wednesday that Riyadh had extended the $3-billion financing it provided in April this year. The facility, which was due to mature on October 31 after an initial three-month term, had helped Pakistan bridge a gap arising from $3.5 billion in repayments to the United Arab Emirates.
Speaking to Pakistan-based the Dawn at Parliament House, Aurangzeb said the extension had been secured for a “reasonable period”, without specifying its duration.
“It has been extended and for a reasonable period. You don’t need to worry as to for how long given the kind of strategic relationship we have,” he said.
According to Dawn, the finance minister also referred to a meeting with his Saudi counterpart, Mohammed Al-Jadaan, on the sidelines of the recent World Bank-IMF meetings in Bangkok. Saudi Arabia had already extended its separate $5-billion financing facility until 2028.
Aurangzeb denied that Islamabad had sought additional financial support from Riyadh, saying the country’s foreign exchange reserves were sufficient to cover more than three months of imports. He said the government expected to strengthen this to four months of import cover by the end of the year through capital-market financing.
Pakistan lowers expectations of $10-billion US facility
The Saudi rollover comes as Pakistan appears to be preparing for the possibility that a proposed $10-billion Exchange Stabilisation Support Facility (ESSF) from the United States may not materialise.
Islamabad had sought the facility in July this year as a liquidity backstop for the government. However, Aurangzeb sought to lower expectations surrounding the proposal, saying Pakistan had already achieved its immediate objective of regaining access to international capital markets.
“What we asked for back in July and were looking at was the market access. We have got the market access,” he said, referring to Pakistan’s $3-billion bond issuance in September, which attracted orders worth $6 billion.
The finance minister said the proposed ESSF, if approved, would provide additional liquidity support to the Pakistani sovereign. But he made clear that the government was not depending on it to meet its financing requirements.
“If that (ESSF) materialises, fantastic, it will be a liquidity support facility. Otherwise, we have plans for further Eurobond issuance, Panda bond issuance and rupee-linked dollar-settled bond,” he said.
Aurangzeb added that he had held meetings with 70-80 institutional investors during his visit to Bangkok, saying they had a clear understanding of Pakistan’s economic position. He said there was investor interest in five-year and 10-year maturities, as Islamabad looked beyond its current International Monetary Fund programme.
The minister also said Pakistan was looking at its engagement with Washington more broadly. He pointed to the role of the US Export-Import Bank and the Development Finance Corporation (DFC), which could support American investors and exporters operating in Pakistan.
“That is real financing and real credit,” he said, distinguishing such financing from the ESSF, which he described as a liquidity-support facility for the government.
“If possible, fine; if not, we are going to move forward, with or without it,” Aurangzeb said.
He also said the IMF Executive Board was scheduled to meet in December to approve a $1.2-billion disbursement to Pakistan.
Pakistan targets reduction in external debt
Separately, Aurangzeb told the Senate Standing Committee on Finance that the government was targeting a $4-billion reduction in external debt during the current fiscal year, followed by a further $3.5-billion reduction next year. This would be higher than the $4.5-billion reduction recorded in the previous fiscal year.
The government was seeking to replace expensive short-term borrowing with longer-maturity financing through bonds and private placements, he said, in an effort to reduce refinancing risks.
Aurangzeb said Pakistan’s external debt had historically increased by $5-6 billion annually, rising from $45 billion in 2014-15 to around $100 billion. However, the annual increase had slowed to about $1 billion over the past two years.
“Our objective is not to increase external debt. All the transactions like Eurobond, Panda bond or private placements have been replacement bonds to replace expensive with cheaper facilities,” he said.
He added that fiscal discipline had helped contain the fiscal and current account deficits. Despite higher oil and wheat import bills, the current account deficit was expected to remain within 1% this year.
“This is hard-earned stability that helped create buffers to meet our requirements despite floods and war in the region, and foreign exchange reserves crossed $21.5bn, which is the best-ever level of reserves in our history,” he said.
Finance Secretary Imdadullah Bosal told the committee that public debt had declined to 68.6% of GDP at the end of June 2026, from 75.1% in the 2022-23 fiscal year. Year-on-year growth in public debt had slowed to 7.7% in the last fiscal year, the lowest in 20 years, he said.
The secretary said domestic debt stood at Rs58.8 trillion at the end of August, down from Rs68.4 trillion at the end of June, while foreign debt remained stable at $98.2 billion.
Pakistan’s net financing requirements stood at $11 billion after rollovers and refinancing, of which $5 billion had already been repaid in the first four months of the current fiscal year. The remaining $6 billion was payable over the next seven months, he said.
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Ask News18Saudi Arabia has extended its $3-billion financing facility, which was originally provided in April and matured on October 31, for a reasonable period. Finance Minister Muhammad Aurangzeb confirmed the extension while noting that it reflects the strong strategic relationship between the two nations.
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Shankhyaneel Sarkar is a chief sub editor at News18. He covers international affairs, where he focuses on breaking news to in-depth analyses. He has over seven years of experience during which he has …Read More
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