Spokesman Report
Islamabad: Mian Zahid Hussain, President Pakistan Businessmen and Intellectuals Forum & All Karachi Industrial Alliance, Chairman National Business Group Pakistan, Chairman Policy Advisory Board FPCCI, and Former Provincial Minister Information Technology, stated today that Pakistan is entering a decisive phase of debt management as it prepares to repay a staggering $4.8 billion in external obligations during the month of April 2026. This significant outflow includes the full settlement of $3.5 billion in loans to the United Arab Emirates and the redemption of a 10-years old $1.3 billion Eurobond maturing on April 8. Pakistan’s foreign reserves may ease out by the receipt of $1.21 billion IMF’s tranche after its board’s approval. While these payments demonstrate Pakistan’s unwavering commitment to its international financial obligations, they pose a substantial challenge to the country’s foreign exchange reserves and necessitate an immediate shift toward sustainable economic structural reforms.
Mian Zahid Hussain said that the repayment schedule for the UAE debt has been finalized with $450 million to be returned on April 11, followed by $2 billion on April 17, and the final $1 billion on April 23. This move comes after the UAE sought the return of these funds, diverging from previous expectations of long-term rollovers. Furthermore, the $1.3 billion Eurobond repayment marks a critical moment for Pakistan’s standing in the international capital markets. Although the State Bank of Pakistan’s reserves currently stand at approximately $16.4 billion, these massive outflows will exert considerable pressure on the liquidity position. It is imperative to recognize that a significant portion of the current reserves is comprised of deposits from friendly nations which must eventually be replaced by earned foreign exchange through exports and foreign direct investment.
Mian Zahid Hussain said that the impact of these repayments on the exchange rate and domestic inflation remains a primary concern for the business community. While the State Bank has maintained the policy rate at 10.5% to anchor inflation expectations, the depletion of reserves could trigger market volatility if not managed with extreme transparency. The federal primary surplus of Rs 2,926 billion and the reduction in interest costs are positive indicators, yet the reliance on short-term borrowing at high interest rates—rising from 3% to 6.5% in some bilateral cases—is not a long-term solution. Pakistan cannot continue to rely on the “roll-over culture” as global geopolitical shifts and regional tensions including the Iran war are making bilateral lenders more cautious about their liquidity.
The veteran business leader further added that the way forward for Pakistan lies in an aggressive transition from a debt-based economy to an investment-led growth model. We must prioritize the conversion of outstanding debt into equity and investment projects, particularly with our Gulf partners, to ease the immediate cash outflow. The government must also address the bottlenecks that hindered the $250 million Panda Bond issuance and other capital market initiatives. To exit the debt trap permanently, Pakistan requires a radical increase in value-added exports, and tourism etc. The exports have recently seen a decline, and a stable environment to attract genuine foreign investment is very much required. Without broadening the tax base and fixing the energy sector’s circular debt, the country will remain vulnerable to the timing of external debt maturities.
