Pakistan on the global stage: What has changed? — I

The conversation around Pakistan has changed.

The most important outcome for Pakistan at the 2026 World Bank Group–IMF Annual Meetings in Bangkok was not a financing number. It was a change in the conversation.

We went to Bangkok to present Pakistan’s economic story to the global financial community: the difficult journey from instability to stabilisation; the structural reforms now being implemented to make those gains durable; and, increasingly, the investment opportunity that is emerging as confidence, buffers and market access improve.

This was therefore about far more than borrowing.

Over an intensive programme of more than 50 high-level engagements, Pakistan interacted with IMF and World Bank Group leadership; IFC and MIGA; multilateral and development institutions including AIIB, OPEC Fund, Saudi Fund for Development, ITFC, the United Nations system, UNDP, ESCAP, IOM and the V20 and the G-24; finance ministers, policymakers and government counterparts; all three major sovereign rating agencies — Moody’s, S&P and Fitch; and a wide spectrum of global banks, institutional investors and market intermediaries. Investor engagements included J.P. Morgan, Citi, Barclays, Jefferies, Bank of America, Standard Chartered, Deutsche Bank, MUFG, Mashreq, ADCB, Ajman Bank and Sharjah Islamic Bank, alongside Lazard, Alvarez & Marsal and MSCI. We also engaged Alibaba on the digital economy and international media including Reuters, Bloomberg and Nikkei Asia, among others.

Across these very different rooms, the questions naturally varied. Investors focused on returns, policy continuity, foreign exchange, ratings and market access. Banks focused on pricing, tenor and financing structures. Rating agencies focused on fiscal performance, reserves, debt, coverages and reform continuity. Development institutions focused on infrastructure, climate resilience, human capital and private-sector participation. Bilateral partners discussed trade, investment, energy, aviation, minerals, tourism and technology. The IMF focused on programme performance and the durability of reforms.

Yet the underlying feedback was strikingly consistent: Pakistan’s hard-earned progress is visible, its economic credibility is rebuilding, and international interest is returning. This was not simply our assessment. The IMF’s latest review says programme implementation has remained “broadly on track despite a challenging external environment”, notes reserves of about $21.5 billion at end-September, and explicitly links sovereign rating upgrades and renewed international market access with stronger policy credibility.

A resilience story in an unusually difficult global environment

The timing matters.

The global economy is contending with geopolitical fragmentation, trade reconfiguration, higher energy risks and tighter financing conditions. The Middle East conflict has added a major new shock. The World Bank estimates that output across the MENAAP region will contract by 2.1 percent in 2026 after growing 3.3 percent in 2025, with GCC economies particularly affected by lower hydrocarbon export volumes and government revenues. Higher shipping and import costs are adding to food and inflation pressures. The IMF, meanwhile, identifies the Middle East energy shock as one of the central forces shaping Asia’s 2026 outlook and warns that it has intensified inflation and fiscal pressures across economies.

Pakistan is not insulated from those shocks. As an energy-importing economy, higher international prices, disrupted supply chains and uncertainty directly affect our inflation, external account and fiscal choices. What differentiated Pakistan’s story in Bangkok, in my view, was that we were confronting this shock with substantially stronger buffers than before.

The resilience has been established

Fiscal consolidation has also created greater resilience. Pakistan has now recorded three consecutive years of primary surpluses, while the fiscal deficit reached its lowest level in more than two decades. Average inflation moderated to approximately 7.1 percent, and the public-debt-to-GDP ratio declined to around 68 percent.

External earnings also demonstrated resilience. By the close of first quarter FY27 (Jul-Sept 26), goods and services exports reached $11.2 billion, up 11 percent year-on-year; remittances rose 14 percent to $10.9 billion; and IT exports increased 18 percent to $1.25 billion. The overall Current Account remained in line with expectations and the rupee remained broadly stable to firmer year-on-year. Interestingly, net foreign direct investment (FDI) recorded at $720 million, up 20 percent, with the profit repatriation becoming BAU.

By September 2026, State Bank foreign-exchange reserves had reached approximately $21.5 billion, more than 50 percent higher year-on-year, with import cover exceeding three months, 37 percent higher year-on-year.

These are not merely continued improvements in economic indicators. Together, they represent stronger shock-absorption capacity, greater policy space and a more credible foundation for investment.

The basic hygiene has been restored

Importantly, the fourth EFF review and third RSF review reached staff-level agreement immediately before the Annual Meetings. Subject to Executive Board approval, they provide access to approximately $1.21 billion, but the more important signal for markets was the IMF’s assessment that implementation remains broadly on track and that reform momentum has been maintained through a difficult external environment.

From financing scarcity to financial optionality

Perhaps the clearest change I observed in Bangkok was in Pakistan’s interaction with capital providers.

There was a time when the overriding discussion was simply about the availability of external financing. Increasingly, the conversation is shifting toward price, maturity, structure, currency, timing and competition among funding sources.

Pakistan returned to the international bond market in September with a $3 billion dual-tranche Eurobond, following its inaugural Panda Bond and other market-access initiatives. These transactions matter not because increasing debt is an objective - it is not - but because regular access to diversified markets gives Pakistan the ability to replace relatively expensive or short-duration borrowing, extend maturities, reduce refinancing concentrations and negotiate from a stronger position.

That shift was tangible in Bangkok. MIGA had revised pricing in the context of Pakistan’s improved sovereign position. ITFC agreed that technical teams should examine the pricing and volume of financing against improved market conditions.

AIIB expressed readiness to support future capital-market issuances. Sharjah Islamic Bank communicated its readiness to participate in a prospective Sukuk. J.P. Morgan discussed analytical support around Pakistan’s ambition to move toward the BB rating category.

MUFG, Standard Chartered, Deutsche Bank, Citi, Lazard and others discussed structures ranging from Sukuk, Panda Bonds and local-currency-linked instruments to credit enhancement, blended finance, guarantees, liability management and potential tokenisation.

Alvarez & Marsal discussed a possible structure combining World Bank and MIGA guarantees that could mobilise around $1.5 billion, subject, importantly, to the guarantee envelope, structuring and approvals.

These are not all committed transactions, and they should not be presented as such. But they demonstrate something consequential: Pakistan now has greater financial optionality.

More institutions are looking at Pakistan, more structures are being proposed, and the discussion is increasingly about securing the right capital at the right cost and maturity rather than accepting financing merely because it is available.

(To be continued tomorrow)

Copyright Business Recorder, 2026