Pakistan eyes fresh financing from China, Saudi Arabia as UAE repayments strain forex reserves

Pakistan is exploring fresh external financing options, including support from China and Saudi Arabia, as pressure on foreign exchange reserves intensifies ahead of repayments of about $3.5 billion to the United Arab Emirates (UAE), Business Recorder reported, citing official sources. 

Delays in the planned issuance of Panda bonds have further constrained financing options at a time when external funding requirements are increasing, according to officials.

Officials said the government is finalising arrangements to repay $3.45 billion during the current month, with $450 million scheduled for payment this week and the remaining amount split into $2 billion due on April 17 and $1 billion on April 23. The loans carry an interest rate of around 6.5% and include liabilities dating back to the late 1990s that were rolled over in recent years.

Data from the State Bank of Pakistan shows total liquid foreign reserves at $21.789 billion as of March 27, 2026, including $16.381 billion held by the central bank and $5.407 billion by commercial banks.

Authorities said the reserve position remains sufficient to meet near-term obligations, including a $1.3 billion Eurobond repayment, but acknowledged that the overall external financing outlook remains challenging.

The International Monetary Fund has projected Pakistan’s gross external financing requirements at $19.398 billion, or 4.6% of GDP, for fiscal year 2025-26, followed by $19.123 billion in 2026-27.

According to the IMF, the programme remains fully financed for the next 12 months, supported by commitments from bilateral partners and multilateral institutions. Financing from sources such as the Saudi Development Fund and China EXIM Bank is expected to continue, while rollovers of short-term liabilities by key partners are also anticipated during the programme period.