Pakistan is actively pursuing the re-profiling of over $27 billion in debt owed to China, Saudi Arabia, and the United Arab Emirates (UAE) as part of efforts to secure a $7 billion bailout package from the International Monetary Fund (IMF) and address mounting energy sector liabilities, according to Dawn.
Pakistani Finance Minister Muhammad Aurangzeb revealed on Sunday that Islamabad has requested an extension of its annual debt portfolio by three to five years from these creditors to facilitate the IMF board’s approval of the bailout package. This move aims to ease consumer tariffs and manage foreign exchange outflows in the energy sector.
The request includes a proposal to convert projects from imported coal to local coal and to re-profile over $15 billion in energy sector liabilities. This adjustment is intended to create fiscal space for the country amid ongoing financial pressures.
The report highlights that Pakistan’s financial dealings with China, Saudi Arabia, and the UAE involve commercial loans and SAFE deposits that are rolled over annually, contributing significantly to external financing needs under the IMF program. The current request seeks to extend the maturity periods of loans—$5 billion from China, $4 billion from Saudi Arabia, and $3 billion from the UAE—to at least three years.
China has acknowledged Pakistan’s foreign exchange challenges and expressed willingness to support Islamabad by facilitating new business ventures and re-profiling energy sector payments. Beijing is also expected to back Pakistan’s case at the IMF board.
Finance Minister Aurangzeb confirmed that the process for debt and equity rescheduling has commenced, involving relevant financial institutions and sponsors of Chinese projects. He also noted that contacts with finance ministers of China, Saudi Arabia, and the UAE have been positive, with assurances of support for extending the debt rollover period.
Aurangzeb emphasized that Pakistan is not seeking additional financing but rather an extension of existing maturities to stabilize external financing. The discussions include revisiting the financial arrangements of the China-Pakistan Economic Corridor (CPEC), which will be handled on a project-by-project basis.
The IMF is expected to finalize a financing needs assessment for Pakistan, which includes the proposed $7 billion Extended Fund Facility. Following these debt rollovers, Pakistan aims to achieve a more manageable external financing gap.
The Pakistani government remains committed to restructuring its financial obligations to enhance its economic stability and secure the necessary support from international partners.