Pakistan seeks to extend debt maturities and $6.7 billion oil financing

Pakistan is implementing a strategy to manage its external debt by refinancing short-term obligations into longer-term commitments over the next two to three years. Finance Minister Muhammad Aurangzeb stated that the government aims to maintain the total external debt stock near $100 billion while focusing on improving repayment schedules to reduce the risks of frequent rollovers.

To diversify financing, the government is expanding its use of instruments such as Islamic Sukuk and new rupee-denominated bonds settled in US dollars. These measures are intended to broaden the investor pool and provide more flexible repayment periods.

In a separate effort to ease immediate foreign exchange pressures, Pakistan has requested a $6.7 billion oil financing facility from Saudi Arabia. The proposed 15-year arrangement would follow the expiration of a previous $1.2 billion annual deferred payment mechanism in April. While Saudi Arabia is currently examining the proposal, no final decision has been reached.