Loan To Repay A Loan? Pakistan Explores Funding Options, Plans Strategic Fuel Reserves Amid Middle East Crisis

Last Updated:April 14, 2026, 14:00 IST

Islamabad is currently in the international spotlight as it is playing an important role in mediation talks between the US and Iran to end the war in the Middle East.

Pakistan is exploring multiple financing options—including Eurobonds, bilateral loans, and commercial borrowing—to replace a $3.5 billion facility from the United Arab Emirates and support its foreign exchange reserves, Finance Minister Muhammad Aurangzeb said.

Speaking to Reuters on the sidelines of the IMF-World Bank Spring Meetings, Aurangzeb said “all options are on the table", including potential support from Saudi Arabia, as Islamabad prepares to repay the UAE loan later this month.

The repayment is expected to put pressure on reserves and could risk breaching targets set under Pakistan’s IMF programme.

Aurangzeb, however, expressed confidence that Pakistan would meet its debt obligations. He noted that reserves currently cover about 2.8 months of imports.

“All options are on the table," Aurangzeb said when asked if the government was in talks with Saudi Arabia for a loan that could replace the UAE facility.

According to Reuters, Pakistan will return a $3.5 billion nL1N40Q0GT loan to the UAE this month, putting pressure on its reserves and risking breaches of its International Monetary Fund (IMF) programme targets.

Islamabad is currently in the international spotlight as it is playing an important role in mediation talks between the US and Iran to end the war in the Middle East.

“We are looking at Eurobond, we are looking at Islamic sukuk, we are looking at dollar-settled rupee-linked bonds," Aurangzeb said, adding that they expected to issue Eurobonds this year and are also exploring commercial loans.

While Islamabad has not yet sought revisions to its $7 billion IMF programme in response to economic shocks from the ongoing Middle East conflict, Aurangzeb said, adding that the adjustments could be considered depending on how the situation evolves in the coming weeks.

“Depending upon how things pan out over the next few weeks, that’s something which can be discussed," he said.

The IMF board is expected to approve the next tranche of funding—just under $1.3 billion—by late April or early May under the Extended Fund Facility and the Resilience and Sustainability Facility.

Pakistan is also preparing to launch its first Panda bond next month, a yuan-denominated issuance worth $250 million as part of a planned $1 billion programme. The bond will be backed by the Asian Development Bank and the Asian Infrastructure Investment Bank.

Aurangzeb said the country’s expected GDP growth of close to 4 percent, remittances of around $41.5 billion and targeted assistance to the poorest citizens could withstand the Iran war shock for this fiscal year, which ends on June 30.

But the price spikes meant the country should focus on establishing strategic reserves of fuels and LPG – rather than simply relying on commercial reserves – and accelerate its move towards renewable energy.

(With agency inputs)

News world Loan To Repay A Loan? Pakistan Explores Funding Options, Plans Strategic Fuel Reserves Amid Middle East Crisis

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