FinMin presses lenders to cut costs

ITFC to renegotiate terms as credit profile improves; M6 loan pending signature

BANGKOK:

Pakistan has secured agreement from the International Islamic Trade Finance Corporation (ITFC) to renegotiate the pricing and volume of its remaining financing tranche, with technical teams set to explore adjustments that align borrowing costs with the country's improved market conditions, according to statements issued by the Ministry of Finance on Thursday.

The understanding was reached at a meeting between Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb and ITFC Chief Executive Officer Adeeb Y Al Aama on the sidelines of the International Monetary Fund (IMF) and World Bank annual meetings in Bangkok. Both sides agreed to find a mutually acceptable solution, as Pakistan seeks to replace costly short-term borrowing with longer-maturity financing without increasing external debt.

Separately, discussions with the OPEC Fund for International Development covered M6 motorway financing, including the approved first tranche, the pending loan agreement and subsequent tranches. Fund President Dr Abdulhamid Alkhalifa invited the minister to visit and sign the project agreement, with ML-1 railway modernisation and power transmission infrastructure identified as priorities.

With Chinese Finance Minister Lan Fo'an, the minister reviewed Pakistan's inaugural Panda Bond issuance, including regulatory support, credit enhancement from the Asian Infrastructure Investment Bank (AIIB), a 2.5% coupon and strong investor demand. He reiterated Pakistan's intention to be a repeat sovereign issuer in the Chinese capital market, and discussions covered Pakistan's return to the Eurobond market after four years and further Panda Bond issuances under the approved RMB 7.2 billion programme.

Both discussed Pakistan's Shanghai Cooperation Organisation (SCO) chairmanship, including the forthcoming summit and the preceding SCO Finance Ministers' Meeting in Islamabad, which Lan said he would attend. They exchanged views on the proposed SCO Development Bank, with China seeking Pakistan's active participation in consultations and support for consensus. Infrastructure cooperation covered progress towards consensus on proposed changes to the route of a China-Pakistan highway project.

In an interview with Channel News Asia, the minister said Pakistan is shifting from aid to trade and investment across bilateral partnerships, acknowledging support from longstanding partners, particularly Gulf Cooperation Council (GCC) countries. Remittances reached $41.6 billion last year and are expected to rise to $44 billion this year. He said CPEC Phase II focuses on monetising existing infrastructure through business-to-business collaboration, joint ventures and export-oriented production. Pakistan seeks stronger ties with both China and the United States under an "and-and" approach, while expanding engagement with GCC countries, Central Asian republics and ASEAN to unlock regional trade.

In a meeting with Moody's, the minister welcomed the recent rating upgrade and improved fiscal and external indicators, highlighting renewed access to international capital markets, rising foreign exchange reserves and reduced State Bank forward liabilities. He sought the rating agency's views on achieving a stronger rating and striking the right balance between political risk and economic performance.

At the JP Morgan Investment Seminar, titled "Pakistan: The Road to Resilience in a Turbulent Global Economy Landscape", the minister highlighted fiscal consolidation, revenue mobilisation and sustained primary surpluses, alongside strong remittances and a contained current account deficit. Discussions also covered federal-provincial fiscal coordination.

At the Bank of America Small Talks Symposium, he outlined tax administration reforms, broadening the tax base and privatisation, alongside tariff reforms, competitive inputs and targeted financing to promote export-led growth. Discussions covered managing regional conflict, energy-price pressures and climate-related shocks.

With United Nations (UN) Deputy Secretary-General Amina J Mohammed, the minister discussed development financing, debt sustainability and climate resilience. He emphasised a stronger Global South voice, simpler access to climate finance, local currency financing and strengthening the Borrowers' Forum through peer learning and an effective virtual Secretariat. He thanked her for appreciating Pakistan's mediation in the recent US-Iran crisis.

With Alibaba International Digital Commerce (AIDC) leadership, discussions covered digital payments, a cashless economy and social protection payments. Both sides discussed rationalising e-commerce taxation, accelerating the Pakistan Single Window platform, tracking cross-border payments, and cooperation on cloud infrastructure, artificial intelligence (AI) and tax administration. They explored modernising Pakistan Post's sorting systems and expanding agricultural exports to China through Alibaba's retail network.

With International Organization for Migration (IOM) Deputy Director-General SungAh Lee, discussions covered climate mobility, early warning systems, skills training aligned with labour-market demand and safe migration pathways.

With Thai Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas, the two discussed increasing bilateral trade, cultural ties, two-way tourism and resuming high-level exchanges.

In the Atlantic Council conversation, the minister said tax revenues rose 40% over two fiscal years, with the tax-to-GDP ratio at approximately 10.3%, supported by digitalisation and structural reforms. Privatisation of power distribution companies and airport outsourcing are advancing, alongside growing private-sector and foreign investor interest. Rs838 billion has been allocated to the Benazir Income Support Programme (BISP). He said Pakistan is moving towards investment- and export-led growth rather than consumption-driven expansion, and will assume the G-24 chairmanship on November 1 while chairing the Borrowers' Platform Governing Council.