Pakistan is preparing to extend the repayment period for both domestic and external loans as part of efforts to meet an International Monetary Fund (IMF) requirement, according to official sources.
The government has developed a comprehensive strategy aimed at easing the country’s future financing burden and improving debt sustainability. The plan, sources said, will be shared with the IMF mission before the next economic review.
Under the proposed plan, the maturity period for domestic debt will increase from the current 3 years and 8 months to 52 months. Similarly, the average repayment period for external debt will be extended from the existing 6.1 years to 76 months.
Officials noted that these adjustments will help spread out debt repayments over a longer timeline, reducing the immediate financing pressure on the economy. The IMF has set 2028 as the target year for Pakistan to fully implement these maturity goals.
The strategy aims to reduce the amount Pakistan needs to borrow each year to meet repayment obligations. By lengthening repayment schedules, the government hopes to stabilize public finances and meet the IMF’s fiscal management benchmarks.
An implementation report will be submitted to the IMF in the coming weeks, with policy execution scheduled to start within the current fiscal year.
The new framework introduces changes to the structure of domestic debt. Around 30% of domestic loans will be issued at a fixed policy rate. This move is expected to bring greater predictability to interest payments and shield the budget from sudden rate hikes.
The share of Shariah-compliant debt in the domestic portfolio will also rise to 20% over the next three years. This adjustment is aimed at diversifying the government’s borrowing instruments and attracting a wider range of investors.
The plan also places a cap on the share of external debt in total public debt. According to officials, external debt will not exceed 40% of the total public debt stock. The move is designed to limit exposure to foreign exchange risk and global interest rate fluctuations.
Extending loan repayment timelines is one of several structural benchmarks agreed upon with the IMF. These reforms are part of the broader effort to stabilize Pakistan’s economy, control fiscal deficits, and ensure debt sustainability.
The IMF’s program for Pakistan emphasizes the need for a balanced debt portfolio that reduces short-term refinancing risks. Officials believe the new strategy aligns with these goals and will strengthen the country’s fiscal position over the medium term.
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