WASHINGTON — Pakistan is weighing fresh external financing and a first strategic fuel reserve as a looming $3.5 billion United Arab Emirates repayment and other near-term obligations tighten pressure on the country’s foreign-currency buffer, April 14. Finance Minister Muhammad Aurangzeb said the government is exploring market borrowing and bilateral support because reserve stability remains central to macro stability and to keeping the IMF program on track.
Latest State Bank of Pakistan data showed central bank reserves at $16.4 billion and total liquid reserves at $21.9 billion as of April 3. But that cushion has come under fresh strain after Pakistan repaid $1.43 billion in external debt and is returning a $3.5 billion UAE facility, a drain Reuters said could pull reserves below the IMF program’s target of more than $18 billion by June unless replacement funding arrives.
Why Pakistan foreign reserves are under fresh pressure
Aurangzeb said “all options are on the table,” including Eurobonds, sukuk, dollar-settled rupee-linked bonds and commercial loans, while Islamabad also plans a first-ever $250 million yuan-denominated Panda bond as the opening piece of a planned $1 billion program. He said reserves still cover roughly 2.8 months of imports, Pakistan expects remittances of about $41.5 billion this fiscal year, and the IMF board could clear just under $1.3 billion in fresh lending by late April or early May.
Pakistan has not yet sought formal changes to its $7 billion IMF arrangement, but Aurangzeb said that option could be discussed if Middle East disruptions persist. That leaves a clear near-term test: whether replacement inflows arrive quickly enough to keep reserves above the June floor and avoid a fresh hit to confidence in the rupee.
Why a strategic fuel reserve is now part of the conversation
Aurangzeb said Pakistan should build strategic reserves of fuel and LPG instead of relying only on commercial holdings, while moving faster into renewable energy. That argument came even as the finance ministry said overall petrol, diesel and crude oil supplies remain stable and refineries are operating at optimal levels.
How the current squeeze built over time
This is not a one-off reserve scare. In January 2023, Reuters reported reserves had fallen to $3.68 billion, barely enough for three weeks of imports. By June 2023, Pakistan had secured a $3 billion IMF standby arrangement to step back from default risk. And in September 2024, financing assurances from China, Saudi Arabia and the UAE helped underpin the current IMF framework. That history helps explain why every rollover, repayment and oil shock still matters to markets.
Pakistan is no longer in the near-default position it faced in early 2023, but the latest squeeze shows the recovery still depends heavily on timely official inflows, debt rollovers and calm energy markets. Until reserves rebuild well above the IMF floor, each large repayment will continue to carry outsized weight.
