Pakistan explores $1.5bn financing through World Bank guarantees

Pakistan is exploring a financing arrangement targeting around $1.5 billion through World Bank Group guarantees to secure funding at competitive rates, the Finance Division said on Friday, as the government seeks to diversify its external financing sources.         

The development came during Finance Minister Muhammad Aurangzeb meeting with Alvarez & Marsal on the sidelines of the World Bank Group–IMF Annual Meetings 2026 in Bangkok, Thailand, to discuss long-term financing through World Bank Group guarantees.

“The finance minister welcomed the proposal of combining a World Bank policy-based guarantee with Multilateral Investment Guarantee Agency (MIGA) coverage to attract financing at competitive rates, with a potential financing target of approximately $1.5 billion, subject to the guarantee envelope and transaction structure,” read the statement.

Discussions covered leveraging World Bank resources, combining budget support with guarantees and broadening investor participation. Aurangzeb emphasised using an existing Development Policy Operation (DPO) to avoid delays associated with negotiating a new framework.

He supported further exploration of the proposal through the Finance Division, Economic Affairs Division and World Bank Group. The meeting also touched on ongoing advisory work on the privatisation of DISCOs.

In another engagement with Erin Browne, Under Secretary for International Affairs, US Department of the Treasury, Muhammad Aurangzeb, accompanied by the Governor of the State Bank of Pakistan (SBP), discussed Pakistan’s economic outlook, reforms and external financing.

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 outlined 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.

He also discussed privatisation, airport outsourcing, engagement with Boeing and potential US EXIM Bank financing, expressing deep appreciation for continued US support.

Moreover, the finance minister also met with 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. He highlighted Pakistan’s restored international capital market access and plans for further issuances, including Panda bonds.

He emphasised cost discipline, alignment with the medium-term financing strategy, and preparation to benefit from favourable market conditions. Both sides discussed sovereign rating advisory support, policy predictability and stronger economic resilience to support progress towards the BB rating category.

It was agreed that follow-up would be coordinated through the Debt Management Office and the State Bank of Pakistan, with Lazard proposing a short note outlining its recommendations.