Pakistan weighs financing options amid UAE loan repayment pressure

Pakistan is exploring multiple financing avenues to stabilise its external position after the United Arab Emirates sought repayment of a $3.5 billion loan, Finance Minister Muhammad Aurangzeb said on Tuesday.

Speaking on the sidelines of the IMF-World Bank Spring Meetings, Aurangzeb noted that the government is keeping “all options on the table,” including bilateral borrowing, commercial loans, and issuance of Eurobonds, to manage the country’s external financing needs.

The development comes at a challenging time for Pakistan, as its foreign exchange reserves face pressure from rising global oil prices and economic spillovers linked to tensions in the Middle East. Official figures show reserves stood at $16.4 billion as of March 27, covering nearly three months of imports.

Pakistan Cuts Development Budget by Another Sixty Three Billion Rupees

Earlier this month, Pakistan was unable to secure a rollover of the $3.5 billion facility from the UAE—marking the first such instance in seven years—raising concerns about short-term financing gaps. The repayment, expected this month, could further strain reserves and complicate targets under the International Monetary Fund programme.

While Aurangzeb did not confirm ongoing talks, reports suggest that discussions may be taking place with countries such as China and Saudi Arabia for potential financial support.

He also highlighted that the ongoing Middle East conflict has prompted policymakers to reassess energy security strategies. These include considering the establishment of strategic petroleum reserves and accelerating the transition toward renewable energy sources.

Despite mounting pressures, the finance minister reaffirmed Pakistan’s commitment to economic reforms under the IMF programme and expressed confidence in securing timely approval of a staff-level agreement.

Officials added that Pakistan’s recent repayment of a $1.3 billion Eurobond reflects improved fiscal discipline. However, analysts warn that external financing risks remain a key vulnerability amid volatile global energy markets and tightening financial conditions.