Finance Minister Muhammad Aurangzeb has said Pakistan wants to reach a B+ sovereign credit rating within the coming fiscal year. In a television interview, he also outlined plans to spread the country’s borrowing across a wider range of sources as the economy strengthens.
Aurangzeb said the government had won three credit rating upgrades over the past year and intends to strengthen its standing in international debt markets.
Rating upgrades and recovery from the 2022 default brink
Moody’s Ratings lifted Pakistan to B3 from Caa1 in August, citing better public finances and a stronger foreign exchange position. In July, S&P Global Ratings moved the country up to B from B-, pointing to firmer economic conditions.
Pakistan has pulled back from the edge of default it faced in 2022, a turnaround that was supported by funding from the International Monetary Fund. According to the report, the country also raised $3 billion through its first Eurobond sale in four years, and its foreign exchange reserves have climbed to a record high.
Borrowing plans and refinancing of short-term debt
Aurangzeb said there was no urgency to issue bonds during the current fiscal year. Instead, banks have already been appointed for future Islamic sukuk offerings and, for the first time, dollar-settled bonds denominated in rupees.
The government will soon seek bids for the remaining part of its panda bond programme, which involves selling bonds in China’s domestic market. Authorities are also studying whether existing Eurobonds could be tokenised.
Over the next two to three years, Pakistan aims to replace some short-term foreign debt with longer-term borrowing, reducing refinancing risk. The minister argued that repeatedly rolling over short-term obligations would not help the country’s standing with rating agencies. He said external debt, which he put at around $100 billion, should remain broadly stable while the government focuses on refinancing, diversifying funding and extending maturities.
Talks with Washington on a $10 billion facility
Aurangzeb said Pakistan was in active discussions with the United States over a proposed $10 billion facility designed to provide liquidity support, rather than a loan or credit line. He added that talks on trade tariffs had entered their final phase.
The two countries were also exploring American support for investment in agriculture, minerals and mining through the Export-Import Bank and the International Development Finance Corporation. The chairman of the Export-Import Bank, John Jovanovic, had shown interest in Pakistan’s refinery sector, which is looking to upgrade its infrastructure. Aurangzeb also said a new automobile policy was expected to be approved within weeks.
An earlier agency report in July said Pakistan had asked US Treasury Secretary Scott Bessent for a Bilateral Exchange Stabilisation Support Facility with a maturity of up to five years. That request, for $10 billion, came as Islamabad sought to build on improved relations with the Trump administration.
