By Staff Reporter
ISLAMABAD: Pakistan is exploring a financing of about $1.5 billion backed by World Bank Group guarantees, part of a push to broaden its funding base after its return to international bond markets, the Finance Division said on Friday.
Finance Minister Muhammad Aurangzeb discussed the plan with Alvarez & Marsal in Bangkok, where the World Bank Group–IMF Annual Meetings are being held. He welcomed a proposal to pair a World Bank policy-based guarantee with cover from the Multilateral Investment Guarantee Agency, or MIGA, to raise money at competitive rates. The size of the deal would depend on the guarantee envelope and the transaction structure, the ministry said.
Aurangzeb urged using an existing Development Policy Operation rather than negotiating a new framework, to avoid delays. He backed further work on the idea by the Finance Division, the Economic Affairs Division and the World Bank Group. The talks also covered combining budget support with guarantees and widening the investor base. Alvarez & Marsal is advising Pakistan on the privatisation of its power distribution companies, and the meeting touched on that work too. Pakistan signed a financial advisory agreement with the firm in February 2025 for the sale of three major power distributors.
The guarantee proposal follows a record debt sale. Pakistan raised $3 billion in September through a two-part Eurobond: $1.75 billion of 5.5-year notes at a 7.50% coupon and $1.25 billion of 10-year notes at 7.90%. The deal drew nearly $6 billion in orders. The country is still rated deep in speculative-grade territory, with Moody’s at B3, several levels below investment grade.
Aurangzeb is using the Bangkok meetings, which run through Oct. 18, to press the case for a higher rating. His delegation had more than 60 meetings scheduled, including sessions with the three major rating companies. He met Fitch Ratings alongside the State Bank of Pakistan governor and asked what Pakistan would need to do to progress toward the BB category. He also met Moody’s earlier in the week.
At both meetings he cited restored access to capital markets, fiscal consolidation and sustained primary surpluses. He also pointed to inflation trends, exchange-rate stability and a contained current-account deficit. The delegation cited rising reserves, lower forward liabilities, falling debt-servicing costs, longer borrowing maturities and bilateral rollover assurances. It reaffirmed a commitment to complete the IMF programme and pursue export-led growth. Earlier this month, Aurangzeb said Pakistan expected to secure a B+ rating from international agencies in the July–September quarter of fiscal 2027-28.
In a meeting with Erin Browne, the US Treasury’s under secretary for international affairs, Aurangzeb highlighted the $3 billion Eurobond and plans to diversify funding through Sukuk, Panda bonds and other instruments. He said Pakistan had posted three consecutive years of primary surpluses and holds foreign-exchange reserves of about $21.6 billion. The two sides discussed how the regional conflict is affecting energy, inflation and food security, and measures to secure supplies ahead of winter demand. Aurangzeb also raised privatisation, airport outsourcing, engagement with Boeing and potential US EXIM Bank financing.
He met a Lazard delegation to discuss mining investment, financing diversification and Pakistan’s credit outlook. He welcomed proposals for blended finance, sustainability-linked loans, guaranteed Sukuk and debt swaps. Follow-up will run through the Debt Management Office and the central bank, and Lazard will send a short note with its recommendations.
At a separate meeting with Morgan Stanley Capital International, Aurangzeb and the central bank governor discussed the index provider’s classification criteria. Foreign investors’ concerns over foreign exchange, prefunding, hedging and pooled investments were on the agenda. The sides also covered repatriation through Special Convertible Rupee Accounts and wider access to Roshan Digital Accounts, and agreed on technical follow-up to address operational problems.
Deutsche Bank told the minister it was interested in advising on privatisation, including power distributors and major airports. Aurangzeb said Pakistan was weighing Sukuk, rupee bonds settled in dollars and possible tokenisation of Eurobonds.
He also met Canada’s Secretary of State for International Development, Randeep Sarai, and urged progress on an investment protection agreement to encourage Canadian investment. They discussed the Barrick mining project, including its security review, financing and potential contribution to exports and jobs. Aurangzeb separately discussed financing for infrastructure projects including the M-6 motorway with the president of the OPEC Fund for International Development.
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