Finance Minister Visits Spain for Debt Relief Talks

Pakistan’s Federal Finance Minister, Senator Muhammad Aurangzeb, today departed Islamabad for Seville, Spain, where he will attend the Fourth International Conference on Financing for Development (FFD4) from July 1–3, 2025. During the conference, he will pitch Pakistan’s innovative debt relief proposal and advance the country’s case for sustainable financing in the global arena.

The Fourth International Conference on Financing for Development aims to mobilize global finance to achieve the UN’s Sustainable Development Goals (SDGs). Participants include:

• Heads of State

• Finance ministers

• Development experts

• Business leaders

The conference focuses on innovative financing tools and debt sustainability for emerging economies like Pakistan

In a high-profile side event, Aurangzeb will present Pakistan’s Debt-for-Development (D4D) proposal. This concept urges creditors to exchange parts of Pakistan’s debt for targeted development investments, a model designed to support economic growth without increasing debt burdens

On July 1, Aurangzeb will co-chair a multi-stakeholder panel titled “Leveraging Private Business and Finance”, highlighting the role of private capital in sustainable development

He will speak at the International Business Forum (IBF) to discuss how emerging markets and developing economies (EMDEs) can improve their global investment appeal through enhanced credit ratings

Aurangzeb will also address the main conference plenary and participate in a panel on revitalizing international development cooperation 

He will speak at a UNICEF-hosted event to highlight capital mobilization strategies to benefit children and young people across developing nations

Urgent External Funding Gap

Pakistan faces a shortfall of approximately $4 billion to support ongoing IMF programs, stabilize foreign exchange, and prevent default

• Mounting External Debt

As of December 2023, Pakistan’s external debt reached $131 billion, including significant dues to China. Heavy commitments to debt servicing threaten fiscal sustainability 

• IMF Loan & Reforms

Pakistan is currently under a 37-month Extended Fund Facility worth $7 billion, aimed at stabilizing the economy through structural reforms. Aurangzeb's reforms target energy, taxation, and SOE privatization 

• China and Gulf Support

Pakistan is engaging China, Saudi Arabia, and the UAE for debt rollover deals and restructuring, critical to closing its funding gap

• Rise in Reserves: Reserves climbed to nearly $9.4 billion, reflecting macro stability 

• Inflation & Tax Reforms: Inflation has slowed, while tax collection rose ~30%, with reform gains from FBR digitization 

• Energy and SOE Overhaul: Focused reforms in energy and government company privatization have begun to bear dividends.

• Power Sector Debt: Negotiations are ongoing with China to restructure ~$15 billion of energy debt, with plans for debt re-profiling

Finance Minister Muhammad Aurangzeb’s trip to Seville signals Pakistan’s urgent effort to tackle debt and financing challenges. By pitching innovative debt-for-development solutions, Pakistan aims to deepen international cooperation, attract investment, and free up resources for national growth. As the global community tunes in at FFD4, Pakistan's performance in securing support could be a strategic game-changer.