The Bank of Punjab (BOP), in collaboration with the British Asian Trust (BAT) acting as Transaction Advisors and Program Managers, has formally launched the Pakistan Skills Impact Bond (PSIB), marking a significant milestone in Pakistan’s evolving social impact and development finance ecosystem. Structured as a Government of Pakistan-backed Term Finance Certificate with a AAA rating, the bond carries a total value of Rs1,000 million and represents one of the most advanced applications of results-based financing in the country to date.
The Pakistan Skills Impact Bond has been developed under the guidance of Federal Minister for Finance and Revenue Muhammad Aurangzeb and Federal Minister for Education Dr. Khalid Maqbool Siddiqui, in close coordination with the National Vocational and Technical Training Commission (NAVTTC). The initiative is designed to directly address Pakistan’s growing skills gap by aligning financing with measurable employment outcomes, rather than traditional input-based funding models.
At the core of the PSIB is a pay-for-success structure, under which private capital is deployed upfront to fund high-impact skills training programmes for Pakistani youth. Repayments to investors are linked to independently verified results, including job placements and sustained employment outcomes. This approach shifts performance risk away from the public sector and toward investors, while ensuring that public funds are spent only on interventions that deliver tangible results.
The programme is being led by Zafar Masud, President and Chief Executive Officer of the Bank of Punjab, with BOP playing a central role as risk investor and underwriter. By assuming initial performance risk and providing capital support, the bank has enabled the blended finance mechanism required to operationalise the bond. According to BOP leadership, the initiative reflects a broader strategic commitment to innovation in development finance and the long-term strengthening of Pakistan’s human capital base.
The PSIB mobilises Rs1 billion in funding aimed at expanding access to market-relevant skills training, increasing workforce participation, and promoting greater inclusion of women in economic activity. By focusing on employability and income generation, the bond is expected to contribute not only to individual livelihoods but also to broader economic resilience and productivity.
International development partners have also extended support to the initiative. The United Kingdom’s Foreign, Commonwealth and Development Office has contributed through the British Asian Trust, with support delivered via FCDO’s Private Sector and Capital Markets Department. This international backing underscores growing global interest in innovative financing mechanisms that blend public, private and philanthropic capital to achieve development outcomes.
Speaking at the launch ceremony in Islamabad, Zafar Masud described the PSIB as more than a financial instrument, emphasizing its role in economic stability and inclusive growth. He noted that the bank’s participation as an underwriter and risk-bearing institution was intended to demonstrate how domestic financial institutions can lead in scaling impact-driven finance models within Pakistan.
Federal Finance Minister Muhammad Aurangzeb highlighted the importance of the initiative in the context of Pakistan’s demographic profile. He said that the country’s young population represents a significant opportunity, but one that can only be realised through large-scale upskilling and reskilling efforts aligned with labour market needs. In this regard, the Skills Impact Bond was described as a critical component of Pakistan’s broader human capital and employment strategy.
The launch of the Pakistan Skills Impact Bond is widely seen as a precedent-setting development for the country’s financial and development sectors. By linking capital market instruments with measurable social outcomes, the initiative demonstrates how private-sector-led innovation can support employment generation, skills development and inclusive economic growth. Market participants expect the PSIB to serve as a model for future impact bonds and blended finance structures in Pakistan, particularly in areas such as education, health and social protection.
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