Pakistan Seeks To Swap $1-Billion UAE Debt For Stake In Asim Munir-Run Fauji Foundation

Pakistan's recent plans to swap part of its debt to the United Arab Emirates for equity in Asim Munir's private Fauji Foundation has raised questions regarding the lack of separation between the military's commercial interests and the state's financial obligations, according to reports.

As per the proposal, Islamabad will allow UAE to convert a portion of the debt into long-term investments.

This deal will involve $1 billion of debt being done away with through the aforementioned process as well as the rollover of an additional $2 billion in loans, according to a briefing from Deputy Prime Minister and Foreign Minister Ishaq Dar.

As of June 2025, Pakistan's external debt had risen to $91.8 billion, while total public debt stood at $286.8 billion, this is compared to its economy which was valued at around $410 billion, according to IMF estimates.

The Fauji Foundation is administered by influential army chief and Field Marshal Asim Munir. Due to it being a private organisation, economists such as Ayesha Siddiqa raised questions regarding the legality of the transaction.

"There was no legal method" for a state debt to be transferred to a private organisation, she said, writing for The Print.

Notably, the Fauji Foundation was established in 1954 to provide support to retired military officers and their family members as per the  Charitable Endowment Act, 1890. Despite being a private foundation, it is run by senior army officials such as Munir.

Siddiqa noted that the Fauji Foundation, like other military welfare organisations such as the Army Welfare Trust, Shaheen Foundation and Bahria Foundation, has never been subjected to public auditing, using its status as a private entity to receive exemption.

She stated that this would require the UAE to overlook issues of financial accountability and disclosure, relying on assurances from Army General Headquarters in Rawalpindi.

Siddiqa further stated that the partnership would give Munir a direct foothold in the economy, with the foundation providing him more influence on it.

“In repositioning the country’s economy — now Munir’s primary objective — he appears to trust only his own men,” she wrote.