Pakistan is exploring a financing arrangement worth around $1.5 billion through World Bank Group guarantees. The proposal aims to secure funding at competitive rates and diversify the country’s external financing sources.
Finance Minister Muhammad Aurangzeb discussed the proposal with representatives of Alvarez & Marsal on October 16. The meeting took place during the 2026 World Bank Group–IMF Annual Meetings in Bangkok, Thailand.
World Bank Guarantees Could Attract Investors
The proposal combines a World Bank policy-based guarantee with coverage from the Multilateral Investment Guarantee Agency (MIGA). Together, these instruments could help Pakistan attract financing on more favourable terms.
However, the proposed amount remains subject to the available guarantee envelope and the final transaction structure. Aurangzeb supported using an existing Development Policy Operation (DPO). This approach could avoid delays that might arise from negotiating a new framework.
The Finance Division, Economic Affairs Division and World Bank Group will explore the proposal further. Discussions also covered advisory work related to the privatisation of power distribution companies.
Pakistan Seeks to Diversify External Financing
During meetings with US Treasury officials, Aurangzeb discussed Pakistan’s economic outlook, reform agenda and external financing requirements.
He highlighted Pakistan’s $3 billion Eurobond issuance in September. Moreover, he outlined plans to diversify financing through Sukuk, Panda bonds and other instruments.
The finance minister also highlighted progress under the IMF programme, three consecutive years of primary surpluses and foreign exchange reserves of approximately $21.6 billion.
Government Eyes Better Financing Terms
Pakistan is also exploring blended finance, sustainability-linked loans, guaranteed Sukuk and debt swaps. These options could broaden funding sources and improve borrowing terms.
Aurangzeb discussed these proposals with a Lazard delegation, which also reviewed Pakistan’s sovereign credit outlook and investment opportunities.
Furthermore, the government aims to strengthen exports, improve competitiveness and maintain debt sustainability. It also wants to progress towards a sovereign credit rating in the BB category.
The government’s financing strategy seeks to reduce reliance on limited funding channels and improve access to international capital markets. However, the proposed World Bank-backed arrangement will depend on negotiations, guarantee availability and the final structure.
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