All Pakistan Business Forum Urges Caution on External Borrowing as FX Reserves Drop to $15.5 Billion

By Muhammad Shahzad | Lahore, Pakistan
The All Pakistan Business Forum (APBF) has warned that Pakistan’s repayment of a $700 million Chinese commercial loan, which reduced foreign exchange reserves to $15.5 billion, underscores the delicate balance between debt servicing and economic stability.
APBF President Syed Maaz Mahmood and Chairman Ibrahim Qureshi said timely repayment demonstrates fiscal responsibility but stressed that reliance on bilateral and multilateral loans cannot replace sustainable domestic revenue generation and structural reforms.
They noted that Pakistan’s dependence on China, the United Arab Emirates, and Saudi Arabia, alongside rising remittances, has so far prevented a sovereign default. However, with a $1 billion China Development Bank loan maturing in June, preemptive repayment without secured refinancing could further pressure reserves.
Syed Maaz Mahmood highlighted that commercial loans rose by $1.7 billion to $7.2 billion in the last fiscal year, reflecting the high cost of external borrowing amid Pakistan’s low sovereign credit rating. He urged the government to prioritize concessional, long-term financing and to explore domestic debt markets before relying on short-term bilateral deposits, citing the recent $2 billion UAE rollover at higher interest rates as a cautionary example.
Ibrahim Qureshi called for a medium-term debt management framework linking foreign borrowing to clear expenditure priorities, with contingency plans to safeguard reserves. He recommended strengthened coordination between the Ministry of Finance and the State Bank of Pakistan to monitor repayments’ impact on FX levels and currency stability.
Both leaders emphasized transparency and governance in loan management, including public debt servicing plans, prioritization of critical sectors, and integration of private sector input to optimize borrowing strategies.
The APBF urged the government to adopt a balanced approach combining prudent external financing, structural reforms, and domestic revenue measures, while reaffirming its readiness to support policy formulation aimed at sustainable economic growth.