Finance Minister Muhammad Aurangzeb has announced the government’s plan to launch the Panda Bond by June this year, aiming to boost Pakistan’s footprint in China’s capital markets.
In an interview with a Hong Kong news channel, the minister revealed that the government is targeting a $200 million raise from Chinese investors through the issuance of the Panda Bond.
This initiative comes as the government, led by Prime Minister Shehbaz Sharif, works to expand the tax base and ramp up revenue generation to meet the conditions of the $7 billion Extended Fund Facility (EFF) from the International Monetary Fund (IMF), approved last year.
Aurangzeb emphasized that the Panda Bond is part of a broader strategy to shift Pakistan’s economy towards export-driven growth, with a particular focus on ensuring long-term balance of payments sustainability.
He also highlighted the strategic importance of the second phase of the China-Pakistan Economic Corridor (CPEC), which, he said, will attract more Chinese businesses and open up further investment opportunities.
The finance minister extended an invitation to Hong Kong’s business community and government to explore potential trade and financial collaborations with Pakistan. He also suggested that Hong Kong could serve as a crucial hub for joint ventures between Chinese and Pakistani companies.
In a recent Bloomberg interview during the Asian Financial Forum in Hong Kong, Aurangzeb expressed Pakistan’s eagerness to tap into the Panda Bond market and Chinese capital, noting, “We have been remiss as a country not to tap it previously.”
The government is considering raising between $200 million and $250 million from Chinese investors over the next six to nine months, slightly below the earlier target of $300 million. China International Capital Corporation is advising Pakistan on the issuance process.
Meanwhile, positive shifts in Pakistan’s economic indicators have been observed. Foreign exchange reserves reached a three-year high of $18.7 billion in November 2024, and remittances surged to $3.1 billion in December, showing a 29.3% year-on-year increase. As a result, the country’s growth forecast for fiscal year 2024-25 has been revised up to 3%, surpassing the previously projected 2.8% by the Asian Development Bank (ADB) in September 2024.
Furthermore, the State Bank of Pakistan (SBP) recently slashed the policy rate by 200 basis points to 13%, the lowest in two years, with expectations for further cuts in the upcoming policy meeting.
Aurangzeb concluded that while the country is in a “phase of stabilization,” the next step would be focusing on achieving sustainable growth.
