Aurangzeb presses lenders to cut borrowing costs at Bangkok meetings
Finance Minister Muhammad Aurangzeb used the sidelines of the IMF and World Bank annual meetings in Bangkok to press Pakistan’s lenders for cheaper financing, as the government looks to replace costly short-term borrowing with longer-maturity loans without adding to external debt.
Muhammad Aurangzeb secures ITFC agreement on pricing review
Pakistan secured agreement from the International Islamic Trade Finance Corporation to renegotiate the pricing and volume of its remaining financing tranche, the Ministry of Finance said on Thursday. Technical teams will explore adjustments that match borrowing costs with Pakistan’s improved market conditions.
The understanding came at a meeting between Muhammad Aurangzeb and ITFC chief executive Adeeb Y Al Aama. Both sides agreed to find a mutually acceptable solution.
Separately, talks with the OPEC Fund for International Development covered M6 motorway financing, including the approved first tranche, the pending loan agreement and later tranches. Fund president Dr Abdulhamid Alkhalifa invited the minister to visit and sign the project agreement. The ML-1 railway modernisation and power transmission infrastructure were named as priorities.
Panda bonds, Eurobonds and the China meetings
With Chinese Finance Minister Lan Fo’an, Aurangzeb reviewed Pakistan’s first Panda Bond issuance, covering regulatory support, credit enhancement from the Asian Infrastructure Investment Bank, a 2.5 per cent coupon and strong investor demand. He said Pakistan intends to be a repeat issuer in the Chinese capital market, and the two discussed Pakistan’s return to the Eurobond market after four years plus further Panda Bond sales under the approved RMB 7.2 billion programme.
Both sides also discussed Pakistan’s Shanghai Cooperation Organisation chairmanship, the coming summit and the SCO Finance Ministers’ Meeting in Islamabad, which Lan said he would attend. They exchanged views on the proposed SCO Development Bank and on changes to the route of a China-Pakistan highway project.
From aid to trade: the minister’s pitch
In an interview with Channel News Asia, the minister said Pakistan is shifting from aid to trade and investment across its bilateral partnerships. Remittances reached $41.6 billion last year and are expected to rise to $44 billion this year. CPEC Phase II, he said, focuses on monetising existing infrastructure through business-to-business deals, joint ventures and export-oriented production.
Pakistan seeks stronger ties with both China and the United States under an “and-and” approach, while expanding engagement with Gulf, Central Asian and ASEAN partners.
At the JP Morgan Investment Seminar, titled “Pakistan: The Road to Resilience in a Turbulent Global Economy Landscape”, he pointed to fiscal consolidation, revenue mobilisation and sustained primary surpluses, alongside strong remittances and a contained current account deficit. At the Bank of America Small Talks Symposium, he outlined tax administration reforms, privatisation and tariff reforms to support export-led growth.
In an Atlantic Council conversation, he said tax revenues rose 40 per cent over two fiscal years, with the tax-to-GDP ratio at about 10.3 per cent. Power distribution company privatisation and airport outsourcing are moving ahead, Rs838 billion has gone to the Benazir Income Support Programme, and Pakistan will assume the G-24 chairmanship on November 1 while chairing the Borrowers’ Platform Governing Council.
What it means for Pakistan’s reserves and ratings
The push for cheaper financing lands as Pakistan’s external buffers improve. Forex reserves stand near $27 billion, and in a meeting with Moody’s, Aurangzeb welcomed the recent rating upgrade and cited renewed access to international capital markets, rising reserves and reduced State Bank forward liabilities. He asked the agency about the path to a stronger rating.
With the UN Deputy Secretary-General Amina J Mohammed, he discussed development financing, debt sustainability and climate resilience. Meetings with Alibaba International Digital Commerce covered digital payments, a cashless economy and e-commerce taxation, while talks with the Thai deputy prime minister covered bilateral trade and tourism.
FAQ
What did Muhammad Aurangzeb achieve in Bangkok?
The ITFC agreed to renegotiate pricing and volume on Pakistan’s remaining financing tranche, the OPEC Fund advanced M6 motorway financing, and the minister pushed Panda Bond and Eurobond plans with Chinese and market counterparts.
Why is Pakistan seeking cheaper financing?
The government wants to replace costly short-term borrowing with longer-maturity financing without increasing external debt, matching borrowing costs to Pakistan’s improved credit profile.
When is Pakistan returning to the Eurobond market?
Discussions covered a return to the Eurobond market after four years, alongside further Panda Bond issuances under the approved RMB 7.2 billion programme.
