Pakistan weighs $1.5bn financing via World Bank guarantees
Pakistan is exploring a financing arrangement targeting around $1.5 billion through World Bank Group guarantees, the Finance Division said on Friday, as the government looks to diversify its external financing sources and secure funding at competitive rates.
The proposal was discussed during Finance Minister Muhammad Aurangzeb's meeting with Alvarez & Marsal on the sidelines of the World Bank Group–IMF Annual Meetings 2026 in Bangkok. According to the Finance Division statement, the arrangement would combine a World Bank policy-based guarantee with Multilateral Investment Guarantee Agency coverage, with a potential financing target of approximately $1.5 billion, subject to the guarantee envelope and transaction structure. Aurangzeb welcomed the proposal and emphasised using an existing Development Policy Operation to avoid delays tied to negotiating a new framework, the statement said. Discussions also covered leveraging World Bank resources, combining budget support with guarantees and broadening investor participation, and touched on ongoing advisory work on the privatisation of distribution companies.
In a separate engagement, Aurangzeb, accompanied by the Governor of the State Bank of Pakistan, met Erin Browne, Under Secretary for International Affairs at the US Department of the Treasury. The finance minister highlighted Pakistan's $3 billion Eurobond issuance in September and plans to diversify financing through Sukuk, Panda bonds and other instruments. He cited progress under the IMF programme, tax reforms, three consecutive years of primary surpluses and foreign exchange reserves of approximately $21.6 billion. Discussions covered the regional conflict's implications for energy, inflation and food security, as well as measures to ensure supplies and prepare for winter demand. Aurangzeb emphasised export-led growth, stronger IT exports, improved goods competitiveness and debt sustainability to support progress towards a BB sovereign rating, and raised privatisation, airport outsourcing, engagement with Boeing and potential US EXIM Bank financing.
The finance minister also met a Lazard delegation to discuss mining investment, financing diversification and Pakistan's sovereign credit outlook. Aurangzeb welcomed proposals for blended finance, sustainability-linked loans, guaranteed Sukuk and debt swaps to broaden funding sources and improve financing terms, and highlighted Pakistan's restored international capital market access and plans for further issuances, including Panda bonds. Both sides discussed sovereign rating advisory support, policy predictability and stronger economic resilience. Follow-up is to be coordinated through the Debt Management Office and the State Bank of Pakistan, with Lazard proposing a short note outlining its recommendations.
