Pakistan is set to issue its first-ever Panda bond in the coming weeks, Finance Minister Muhammad Aurangzeb announced, marking a significant step in diversifying the country’s international funding sources and strengthening debt management. Speaking at a seminar organised by Nutshell Group, titled Resetting Pakistan’s Economic Direction, Aurangzeb said previous international bond issuances were conducted in US dollars, euros, or Islamic sukuk. Issuing in renminbi (RMB), he added, offers access to the world’s second-largest and second-deepest capital market, with a swap into dollars providing a 2.5% cost advantage.
Aurangzeb highlighted Pakistan’s improving fiscal position, noting that the country’s debt-to-GDP ratio has dropped to 70% from 75%, and average debt maturity has been extended to over four years. These measures have reduced refinancing costs and eased financial pressure. “Last year, we saved around Rs850 billion in debt servicing, and if all goes well, this year we expect similar savings,” he said, attributing improvements not only to falling policy rates but also to better debt management strategies. The inaugural Panda bond is expected to target $250 million, with a launch anticipated in January.
The minister also outlined steps taken to improve fiscal discipline, including handing over 24 state-owned enterprises (SOEs) to the Privatisation Commission. Aurangzeb cited losses nearing Rs1 trillion annually from inefficient SOEs and highlighted decisions to shut down entities such as PWD, Utility Stores Corporation, and PASSCO, which relied heavily on subsidies often linked to corruption. He stressed that resources recovered from these reforms could be redirected to more productive sectors.
Aurangzeb underscored structural reforms, particularly tariff reforms, aimed at reducing regulatory, customs, and additional customs duties to lower costs for intermediate and raw materials. He called this initiative “the first time in 78 years such reforms have been undertaken,” suggesting it could position Pakistan for an “East Asia moment.” The minister also noted that long-standing protection had limited Pakistani industries’ competitiveness, and reforms aim to enhance export orientation.
The Finance Minister acknowledged both foreign investment inflows and exits, citing 20 new investors over the past 18 months, including Google, Aramco, Samsung, BYD, and Turkish Petroleum, while noting some firms exited due to taxation, energy, and financing costs. Highlighting capital market growth, he stated that 135,000 new investors have joined the Pakistan Stock Exchange, 280 new companies have been registered, nine IPOs were launched last fiscal year, and 16 more are in the pipeline.
Aurangzeb also addressed emerging sectors, noting Pakistan has roughly 40 million crypto users and a global freelancer base, emphasizing the need to bring these activities into a regulated framework. By June, he said, all government payments will be routed through digital channels. He concluded by warning that to achieve Pakistan’s long-term $3 trillion economic target by 2047, the current population growth rate of 2.55% must be reduced, as growth alone will not suffice.
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