14% of Pakistan’s current bond portfolio now comprises Sukuk instruments: FinMin

KARACHI: Highlighting the government’s focus on Islamic finance, Finance Minister Muhammad Aurangzeb said that around 14 per cent of Pakistan’s current bond portfolio now comprises Sukuk instruments. He added that work on the upcoming federal budget is underway, with pension reforms and debt servicing expected to receive particular attention. 

The minister was speaking at the Gong ceremony held to mark the auction of Pakistan’s first Green Sukuk, with an issuance size of Rs30 billion. The instrument is being issued under the Sustainable Investment Sukuk Framework, part of Pakistan’s Vision 2028, according to a handout issued by Arif Habib Limited. 

Aurangzeb also termed the IMF’s recent approval of the first review and the $1.3 billion Resilience and Sustainability Facility (RSF) as a significant milestone for the country. 

He said Pakistan is actively engaged in restructuring and reorganising its debt to ensure long-term fiscal sustainability. The government is exploring various innovative funding avenues, both domestic and international, to diversify sources and build economic resilience. 

The finance minister noted that Pakistan has held productive engagements with multilateral and bilateral partners and expressed satisfaction over the country’s progress toward macroeconomic stability. 

Speaking at the event, Dr Shamshad Akhtar, Chairperson of the Pakistan Stock Exchange (PSX) Board, said Pakistan aims to issue both Green Sukuks and Green Bonds. She pointed out that the country’s climate adaptation needs are projected at $348 billion by 2030, which cannot be met through traditional financing alone. 

She described Green Sukuks as a gateway to the $2.5 trillion global green bond market, noting that Pakistan holds the potential to become a regional leader in Sharia-compliant green finance. While fossil fuels still account for 60 per cent of the country’s energy mix, Green Sukuks could play a vital role in accelerating the shift to renewable sources, she added. 

Dr Akhtar said Pakistan has over 40,000 MW solar and 50,000 MW wind potential, which presents significant opportunities for green investment. She also noted that Green Sukuks could help finance waste-to-energy projects. 

Meanwhile, Khurram Schehzad, Advisor to the Finance Minister, identified climate change and population growth as two of Pakistan’s most pressing challenges. 

He highlighted three key indicators of economic improvement: the tax-to-GDP ratio has increased from 9.5 per cent to 10.6 per cent, with a projection of 11 per cent by FY26; the debt-to-GDP ratio has declined from 74 per cent to 65 per cent; and overall revenue has increased. 

He also revealed that the government plans to introduce Panda bonds to access capital from Chinese markets. 

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