Pakistan Partners with Arab World Buna Network AMF
As Pakistan navigates through a crucial economic phase, the government is taking proactive steps to manage its external debt obligations and strengthen its financial infrastructure. A significant move in this direction is Pakistan’s readiness to repay a $500 million Eurobond by September 30, 2025. This milestone coincides with a critical IMF review under the ongoing $7 billion Extended Fund Facility (EFF). Simultaneously, Pakistan Partners with Arab World Buna Network AMF to boost remittance inflows by making advancements in its digital payment systems through the Arab Monetary Fund’s (AMF) platform.
Pakistan Joins Arab Monetary Fund’s “Bona” Payment System
In a bid to modernize its cross-border payment systems and enhance remittance flows, Pakistan has decided to integrate its digital payment infrastructure with the Arab world’s “Bona” system. Operated under the supervision of the Arab Monetary Fund, “Bona” offers a fast, secure, and efficient channel for financial transactions across member countries.
According to senior officials, this integration will allow Pakistan to receive remittances from overseas Pakistanis in Arab countries through a streamlined and secure mechanism. However, the current setup will not permit fund outflows, meaning the system is designed only for inward remittances. This is a strategic move to increase the inflow of foreign currency and reduce reliance on traditional banking networks.
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Pakistan Ready for $500 Million Eurobond Repayment
Pakistan is set to repay a $500 million Eurobond that will mature on September 30, 2025. This bond was issued in 2015 for a period of 10 years with an annual interest rate of 8.25%. In a recent statement, State Bank Governor Jamil Ahmed confirmed that the repayment has been fully arranged and will not exert pressure on the country’s foreign exchange reserves.
This assurance comes at a time when Pakistan is scheduled to undergo a second review under the IMF’s EFF program. The IMF mission is expected to arrive in Islamabad between September 25 and the first week of October, just around the repayment date. Ensuring timely repayment of external obligations is critical for maintaining investor confidence and meeting IMF conditions.
Breakdown of External Debt for FY 2025–26
For the fiscal year 2025–26, Pakistan faces a total external debt repayment obligation of $26 billion. Out of this, $3.5 billion has already been repaid, easing the pressure somewhat. Additionally, about $9 billion in deposits from friendly countries are included in this total. These deposits, provided by allies such as Saudi Arabia, the UAE, and China, are expected to be rolled over, providing a buffer for Pakistan’s foreign exchange reserves.
This rollover is vital as it helps the central bank manage its balance of payments and maintain adequate reserve levels while meeting sovereign debt obligations.
Upcoming Eurobond and Sukuk Maturities
In addition to the $500 million Eurobond maturing in September 2025, Pakistan has several other major bond payments due in the coming years:
- $1 billion Eurobond in April 2026: Issued in April 2021 with a 5-year term at an interest rate of 6%.
- $1 billion Eurobond in 2031: Also issued in 2021, this bond carries a 7.3% interest rate.
- $1 billion Sukuk bond maturing in 2029: This 7-year bond was issued in January 2022.
These upcoming maturities underscore the need for a well-planned debt strategy, particularly as global credit conditions tighten and capital becomes more expensive.
Exploring New Avenues: Panda Bonds and International Markets
To diversify its sources of financing and reduce dependency on Western markets, Pakistan is preparing to issue Panda Bonds in the Chinese financial market. The government plans to launch the first Panda Bond transaction by December 2025, valued between $200 million and $250 million.
However, the issuance of new Eurobonds or Sukuk bonds remains uncertain. Analysts suggest that such issuances depend heavily on a favorable global investment climate and at least one notch improvement in Pakistan’s sovereign credit rating. Until that happens, Pakistan is focusing on bilateral and multilateral sources of funding and selective engagement with capital markets.
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Managing Forex Reserves and Ensuring Stability
Top government sources have indicated that the State Bank of Pakistan (SBP) may continue buying dollars from the open market to maintain reserve levels and ensure timely debt repayment. This strategy, combined with the expected inflow from the “Bona” system and friendly country support. Aims to protect Pakistan’s foreign exchange reserves.
The SBP’s strategy reflects confidence in its monetary policy and foreign exchange management. Especially in the face of growing debt responsibilities and upcoming IMF evaluations.