Pakistan is aiming to launch yuan denominated bonds at the Chinese Capital Market before the end of this year, according to Finance Minister Muhammad Aurangzeb.
Speaking with Bloomberg Television on the sidelines of the Asian Financial Forum in Hong Kong, Aurangzeb said this would a first for Pakistan. He said the government had initially planned to sell bonds in excess of $300 million—as he had announced in March 2024—but had since reduced that to $200-250 million. The amount would be raised in the next six to nine months, he added.
According to the minister, the plan follows the upgrading of Pakistan’s sovereign rating by all three major credit agencies—Fitch, Moody’s, and Standard and Poor’s. Hoping for further upgrades in the coming months, he said the challenge was to get into a “single-B” category, allowing the country to return to global bond markets to raise funds.
“The country is very keen to tap the Panda bonds and the Chinese capital markets,” Aurangzeb said. “We have been remiss as a country not to tap it previously,” he said, adding China International Capital Corporation was advising Islamabad on the issuance of Panda bonds.
After several years of economic crisis, Pakistan’s situation has stabilized, bolstered by declining inflation and interest rates and a 37-month $7 billion Extended Fund Facility with the International Monetary Fund (IMF). Despite some slippages, notably in revenue generation, the government remains optimistic it would meet the terms of the bailout, explained the minister.
Noting that an IMF team would visit Pakistan for a review next month, Aurangzeb said the global lender wants the country to broaden its tax base and achieve a tax-to-GDP ratio of 13.5%. In December, the country recorded a tax-to-GDP ratio of 10%. “We are well on our way to achieve that (13.5%) target, not only because the IMF is saying that but because from my perspective the country needs to get into that benchmark to make our fiscal situation sustainable,” he added.