ISLAMABAD: Pakistan’s government is launching a bold offensive against dollar dominance as the country braces for 4.8 billion dollars in external debt repayments this month alone including the 1.3 billion dollar Eurobond already settled.
The Prime Minister’s Office has issued fresh instructions to the Finance Ministry and State Bank of Pakistan to finalise currency swap agreements with the European Union Russia and Iran.
These pacts form part of the Ministry of Finance’s strategic reforms agenda and are being closely monitored by the PM’s Delivery Unit according to Express Tribune reports.
Officials are simultaneously exploring similar arrangements with ASEAN member countries modelled exactly on the existing Pakistan-China currency swap facility.
Under that landmark deal Islamabad has already availed a 4.5 billion dollar trade facility though the bulk has been channelled into debt settlement rather than fresh trade.
The move comes as State Bank of Pakistan reserves stand at 16.38 billion dollars meaning April’s repayments will drain nearly 30 percent of the central bank’s holdings until fresh inflows arrive.
Finance Minister Muhammad Aurangzeb has publicly confirmed the 4.8 billion dollar repayment schedule underscoring the acute pressure on foreign exchange buffers.
Government sources say agreements with Russia and Iran could unlock entirely new trade corridors while broader swaps would slash dependence on dollar settlements and ease reserve volatility.
The existing Pak-China arrangement valued at 30 billion yuan equivalent to roughly 4.2 billion dollars was renewed in 2024 and has already provided critical breathing space during previous liquidity crunches.
Pakistan’s current account has shown resilience with a surplus recorded in early 2026 yet structural dollar reliance continues to expose the economy to global shocks.
The PM Office has additionally directed the Finance Ministry and State Bank to bring the policy rate below 10 percent from its present 10.5 percent level.
Simultaneous instructions call for stabilising the currency market curbing dollar hoarding and activating the Asian Clearing Union mechanism for regional trade settlements in local currencies.
Such steps are expected to reduce transaction costs by several percentage points and shield importers from rupee-dollar swings that have historically added billions to the import bill.
Regional media including Express Tribune and Pakistan Today highlight that these swaps align with Pakistan’s long-term de-dollarisation roadmap which has gained urgency amid Middle East tensions and rising global commodity prices.
The dollar’s share in worldwide foreign exchange reserves has already slipped to approximately 58 percent by late 2025 reflecting a broader international shift that Pakistan now seeks to exploit.
Trade experts note that local-currency settlements with Iran could boost the bilateral target of 5 billion dollars while Russia offers avenues for discounted energy imports paid in rubles or rupees.
ASEAN engagement would diversify options beyond China and tap into one of the world’s fastest-growing economic blocs.
The government views these agreements as more than short-term relief describing them as foundational to sustainable external sector stability.
Implementation will require technical coordination between the State Bank and partner central banks including alignment on settlement mechanisms and risk-sharing protocols.
Success could set a precedent for other emerging economies facing similar dollar constraints and strengthen Pakistan’s negotiating position in future IMF and bilateral financing talks.
Analysts project that full operationalisation of the new swaps might conserve up to 1 billion dollars annually in forex outlays while opening export markets currently restricted by dollar shortages.
The timing is critical with global uncertainty from geopolitical conflicts already inflating oil and freight costs that directly hit Pakistan’s import-dependent economy.
By prioritising rupee-based or partner-currency trade Islamabad aims to insulate itself from external volatility that has repeatedly tested reserve levels in recent years.
The strategic roadmap also includes measures to check speculative dollar hoarding and ensure interbank liquidity supports the rupee’s stability.
Overall these initiatives represent Pakistan’s most comprehensive de-dollarisation push to date with potential to reshape trade patterns across multiple continents.