Pakistan plans to debut yuan-denominated Panda bonds this year, signaling its intent to tap into Chinese capital markets, according to Finance Minister Muhammad Aurangzeb. Speaking at the Asian Financial Forum in Hong Kong, Aurangzeb highlighted the country’s efforts to stabilize its economy and pursue sustainable growth.
“The country is eager to leverage Panda bonds and Chinese capital markets, a step we should have taken earlier,” Aurangzeb told Bloomberg Television. Pakistan aims to raise $200–$250 million from Chinese investors within six to nine months, slightly below the earlier target of $300 million. The issuance is being advised by China International Capital Corporation.
This initiative aligns with the government’s broader strategy to expand the tax base and increase revenue to meet conditions set by the International Monetary Fund (IMF) under its $7 billion Extended Fund Facility. The program, approved last year, includes a target to raise the tax-to-GDP ratio from 10% in December to 13.5%.
The country’s economic indicators have recently shown signs of improvement. Foreign exchange reserves surged to a three-year high of $18.7 billion in November 2024, while December remittances reached $3.1 billion, reflecting a 29.3% year-on-year increase. Additionally, the Asian Development Bank revised Pakistan’s growth forecast for the fiscal year 2024-25 to 3%, up from 2.8% in September 2024.
The State Bank of Pakistan reduced its policy rate by 200 basis points to 13%, the lowest in two years, with further cuts anticipated.
Aurangzeb emphasized the importance of transforming Pakistan’s economy into an export-led model, stating that the country is currently in a “stabilization phase” and focused on sustainable growth. He also noted that GDP growth is expected to reach 3.5% this fiscal year, following a 2.5% growth in the previous year.
