Islamabad, Jan 13: Pakistan is set to take a significant step toward diversifying its financial resources by issuing yuan-denominated bonds, aiming to raise $200–250 million from Chinese investors within the next six to nine months.
This initiative, announced by Finance Minister Muhammad Aurangzeb at the Asian Financial Forum in Hong Kong, highlights Pakistan’s strategic shift to tap into China’s vast capital markets for the first time.
The move, advised by China International Capital Corporation, marks a pivotal moment in the country’s economic strategy.
Finance Minister Aurangzeb described the decision as long overdue and expressed optimism about further improvements in Pakistan’s credit ratings, with aspirations to enter the “single-B” category. This would enable the country to regain access to global bond markets.
While the current target is slightly lower than the $300 million initially projected for 2024, the initiative underscores Pakistan’s commitment to financial innovation.
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Simultaneously, Pakistan is working to fulfill the International Monetary Fund’s (IMF) requirements under a $7 billion loan program. Key among these conditions is raising the tax-to-GDP ratio to 13.5 percent.
However, The IMF will review Pakistan’s progress next month. Meeting these targets is crucial to unlocking the next $1 billion tranche of the bailout.
Encouragingly, Pakistan’s economic indicators show signs of stabilization. Inflation has eased, interest rates have dropped to a two-year low, and remittances and foreign currency reserves have increased.
Although, The rupee appreciated by 2 percent in 2024, and the Pakistan Stock Exchange (PSX) emerged as a regional outperformer.
These positive trends reflect the government’s efforts to restore macroeconomic stability.
Despite these achievements, significant challenges remain. Pakistan must undertake long-term reforms in energy, taxation, and state-owned enterprises to reduce its reliance on debt and achieve sustainable economic growth.
Failure to meet the IMF’s fiscal targets could jeopardize access to critical funding.
The government projects a GDP growth rate of 3.5 percent for the fiscal year ending June 2025, with inflation expected to stabilize between 5–7 percent over the next year.
As Pakistan navigates these challenges, initiatives like the yuan-denominated bonds signal its determination to strengthen economic resilience and build a more sustainable financial future.
