Pakistan is preparing to enter a new corner of the global debt market with plans to issue its first ever Panda bond in the coming weeks, Finance Minister Muhammad Aurangzeb has said.
Speaking at a seminar in Islamabad, Aurangzeb said Pakistan has traditionally raised money through bonds issued in US dollars, euros or Islamic sukuk. This time, the government plans to borrow in Chinese yuan, also known as renminbi, from China’s domestic bond market.
He said the move could bring clear savings. Issuing debt in yuan and then converting it into dollars could give Pakistan a cost advantage of about 2.5 percent. “Every single bit counts,” the minister said, as the country continues to manage tight public finances.
Aurangzeb said Pakistan’s debt position has improved over the past year. The debt to GDP ratio has fallen to 70 percent from 75 percent. At the same time, the average maturity of government debt has been extended to more than four years, easing pressure on repayments.
He said the government saved around Rs850 billion in debt servicing last year and expects similar savings this year. This, he added, was not only due to lower interest rates but also better debt management.
The minister also spoke about reforms in state owned enterprises. He said 24 entities have been handed over to the Privatisation Commission. According to official estimates, these firms were costing the country nearly Rs1 trillion each year. Some bodies, including the Utility Stores Corporation and PASSCO, were shut down due to heavy subsidies and misuse of funds.
On trade and industry, Aurangzeb said tariff reforms are under way to cut costs for local manufacturers. Duties on raw materials and inputs have been reduced to help firms compete and export.
He said foreign interest remains mixed but encouraging. Over the past 18 months, 20 new foreign investors have entered Pakistan, including major global names. At the same time, some firms have left due to high taxes and energy costs.
Aurangzeb ended with a warning. If Pakistan hopes to become a $3 trillion economy by 2047, population growth must slow. Without that, he said, economic growth alone will not be enough.
