Pakistan Plans to Introduce First $200-250 Million Panda Bonds in China in 2025

During an interview at the Asian Financial Forum in Hong Kong on Monday, Pakistan’s Finance Minister Muhammad Aurangzeb disclosed the country’s plans to issue bonds denominated in yuan this year. The goal is to attract $200-250 million from Chinese investors within the next six to nine months.

In response to advice from China International Finance Corporation, the country has launched the program, which will help it access the Chinese finance markets. The finance minister referred to it as a long-overdue action.

In order to regain access to the global bond markets, Aurangzeb is hoping to upgrade even further and climb into the “single-B” category. The current goal has been lowered from $300 million earlier in 2024.

Pakistan is likewise intent on fulfilling the terms of a $7 billion credit arrangement with the International Monetary Fund (IMF). The lender wants the tax-to-GDP ratio raised to 13.5% when they assess the progress next month.

After receiving its bailout from the International Monetary Fund last year, Pakistan’s economy began to show indications of stabilization. Interest rates have dropped to a two-year low, remittances have surged, and currency reserves have grown. Inflation has also subsided. In 2024, the rupee saw a 2% appreciation, while the PSX well outpaced Asian markets.

But in order to acquire the next $1 billion in funding from the IMF, Pakistan will need to boost taxes. Otherwise, it will miss the fiscal benchmarks set by the organization for the year ending in June 2025. Aurangzeb further by saying that ending reliance on debt requires long-term changes to energy, taxes, and state-owned industries.

For the fiscal year ending in June, the government anticipates GDP growth of 3.5%, with inflation expected to stabilize within a range of 5-7% for the next year.