Hong Kong, January 13, 2025 – Pakistan plans to issue yuan-denominated bonds, known as Panda bonds, aiming to raise $200–250 million from Chinese investors within the next six to nine months. The announcement was made by Federal Minister for Finance and Revenue Muhammad Aurangzeb during the Asian Financial Forum in Hong Kong. This marks Pakistan’s first foray into the Chinese capital markets, undertaken with advisement from the China International Capital Corporation.
Aurangzeb termed the move “long overdue” and expressed optimism about Pakistan’s efforts to reaccess global bond markets. The initial target of $300 million, projected earlier in 2024, has been slightly revised downward. The country is also focusing on upgrading its credit rating to enter the “single-B” category, reported Bloomberg.
Focus on IMF Conditions and Economic Reforms
Pakistan is concurrently working to meet the International Monetary Fund (IMF) conditions under a $7 billion loan program, which requires raising the tax-to-GDP ratio to 13.5%. The IMF is set to review Pakistan’s progress next month, with a $1 billion tranche at stake. Finance Minister Aurangzeb emphasized the need for long-term reforms in energy, taxation, and state-owned enterprises (SOEs) to end the cycle of debt dependency.
Economic indicators have shown signs of stabilization following the IMF bailout last year. Inflation has eased, interest rates are at a two-year low, and remittances and currency reserves have increased. The rupee appreciated by 2% in 2024, while the Pakistan Stock Exchange (PSX) outperformed other Asian markets. Pakistan’s GDP is projected to grow by 3.5% for the fiscal year ending June 2025, with inflation expected to stabilize within a 5–7% range.
Strengthening Pakistan-China Economic Ties
During a meeting with Chinese Finance Minister Lan Fo’an in Washington, D.C., Aurangzeb discussed Pakistan’s entry into a larger IMF program and sought China’s support. He lauded China’s contributions to Pakistan’s development, including the China-Pakistan Economic Corridor (CPEC) and financial assistance through SAFE deposits and rollovers.
Aurangzeb highlighted the transition of CPEC from Phase I, focused on infrastructure, to Phase II, which will involve monetizing assets through Special Economic Zones (SEZs) and the relocation of Chinese private-owned companies. He reaffirmed Pakistan’s commitment to accelerating this phase while expressing condolences over a recent terrorist attack targeting Chinese nationals in Pakistan.
Meetings with International Financial Institutions
In a separate meeting with Martin Raiser, World Bank’s Regional Vice President for South Asia, Aurangzeb expressed satisfaction over the soon-to-be-finalized Country Partnership Framework (CPF). He commended the World Bank’s focus on climate change, digitalization, and human development, aligning with Pakistan’s priorities.
The Finance Minister also stressed the importance of completing development projects on time to achieve Pakistan’s economic growth goals, underlining the government’s vision to unlock the country’s potential.
This multifaceted strategy underscores Pakistan’s commitment to diversifying its funding sources, stabilizing the economy, and fostering international cooperation.