The Ministry of Finance on Wednesday successfully raised over Rs. 1.2 trillion through a major auction of government bonds, including the launch of a new 15-year Zero Coupon Bond—the first of its kind in Pakistan—that raised over Rs. 47 billion.
The Zero Coupon Bond does not pay out interest every year. Instead, investors receive a lump sum at the end of 15 years. This helps the government reduce short-term repayments and plan finances better. The strong response shows that investors are confident in Pakistan’s economy and reforms.
The initiative is part of the government’s broader strategy to reduce borrowing risks, extend the repayment period of debt, and promote Islamic and long-term financial products. Yields on other government bonds also dropped, indicating optimism in financial markets about falling inflation and lower interest rates in the future.
Pakistan’s debt is now becoming more stable, read a statement from the Ministry of Finance. The average repayment period of domestic debt has increased from 2.7 years to 3.75 years, reducing the pressure to repay loans quickly. Moreover, more pension funds and insurance companies—rather than just banks—are now investing in government bonds. This helps spread financial risk and deepen the local investor base.
“This is a major step forward in making Pakistan’s financial system stronger and more resilient,” said Finance Minister Muhammad Aurangzeb. “We are introducing new, smart ways of borrowing that reduce risk and give investors more options. Our aim is to manage public debt responsibly, promote Islamic finance, and attract more long-term investment to support the country’s economic growth,” he added.
The Ministry of Finance is also working on more products to allow ordinary citizens to invest in government bonds, especially Islamic ones, to encourage savings and financial inclusion. Despite global uncertainties, today’s auction shows that Pakistan’s economy is gaining investor trust and moving in the right direction, the ministry maintained.