According to a Bloomberg report, Finance Minister Muhammad Aurangzeb announced on Monday that the country is preparing to issue yuan-denominated panda bonds this year to strengthen its fiscal position.
Aurangzeb revealed during an interview that the plan involves raising between $200 million and $250 million over the next six to nine months from Chinese investors. Panda Bonds are a financial instrument that allows foreign entities to secure funding in Chinese yuan in China’s capital markets.
In March last year, Aurangzeb highlighted Pakistan’s interest in raising up to $300 million through these bonds, stressing their importance in engaging Chinese investors. He admitted that Pakistan had not explored this financing option earlier but was now optimistic about availing it.
Addressing the Asian Financial Forum in Hong Kong, Aurangzeb also confirmed that a delegation from the International Monetary Fund (IMF) is scheduled to visit Pakistan next month. He noted that the IMF has urged the country to broaden its tax base and achieve a tax-to-GDP ratio of 13.5 percent from the current 10 percent. “This target is important not only to meet IMF expectations but also to ensure fiscal stability for Pakistan,” he remarked.
In September, Pakistan signed a $7 billion loan agreement with the IMF to stabilize its economy and lay the foundation for sustainable growth. Subsequently, Fitch upgraded Pakistan’s credit rating to CCC+, while Standard & Poor’s maintained the same rating.
Over the past 50 years, Pakistan has participated in 25 IMF programs, with consistent recommendations for reforms in key sectors such as energy, the tax system, and freeing public institutions from the debt cycle.
Aurangzeb forecast GDP growth of 3.5 percent for the fiscal year ending in June, saying, “We are in a phase of consolidation and now to fundamentally transform the economy into a sustainable, export-led one.” The goal is to transition to development.”
Meanwhile, the State Bank of Pakistan, which recently cut its policy rate to 13 percent in December, cited improving economic growth and easing inflationary pressures. Interest rates are expected to be reviewed again on January 27.
