Pakistan to launch Panda Bond to tap Chinese capital markets

ISLAMABAD: Finance Minister Muhammad Aurangzeb has said that Pakistan plans to launch Panda Bond by June this year to enhance the country’s presence in China’s capital markets.

In an interview with Hong Kong’s TVB News Channel, he said through the issuance of the Panda Bond, Pakistan intends to raise approximately $200 million from Chinese investors.

The minister emphasised that this step is part of a broader strategy to transition Pakistan’s economy towards export-driven growth, with a focus on achieving sustainability in the country’s balance of payments.

 He also highlighted the critical importance of the second phase of the China-Pakistan Economic Corridor.

 Aurangzeb said that the second phase of CPEC would attract more Chinese companies and also open avenues for increased investments.

He extended an invitation to Hong Kong to send delegations to explore trade and financial opportunities in Pakistan.

 The finance minister said that Hong Kong could serve as a strategic hub for joint ventures between Chinese and Pakistani companies.

The plan comes as Pakistan’s sovereign rating has been upgraded recently by all three credit agencies.

Also read: Pakistan makes progress on first Panda bonds: Bloomberg

Pakistan has enjoyed some stability from two years ago when an IMF bailout deal was in limbo and inflation and interest rates were above 20 per cent.

Still Tough

Even so, Pakistan remains in a tough spot. The government has to increase taxes to secure a fresh $1 billion loan tranche from the IMF or miss the lender’s tax revenue requirement for fiscal year ending June 2025 which could put the bailout at risk, Bloomberg Economics’ Ankur Shukla said in a note on January 8.

Having gone through 25 loan programmes over half a century, Pakistan must institute durable reforms in key areas of the energy sector, tax collection and state-owned enterprises to end a cycle of indebtedness, the Finance Minister told an IMF form in October.