Pakistan is set to launch its first-ever Panda Bond with backing from the Asian Development Bank. This would mark a breakthrough in the country’s efforts to diversify financing sources and tap into China’s capital markets.
Finance Minister Muhammad Aurangzeb announced on Wednesday that Pakistan is preparing to re-enter international capital markets, signaling renewed confidence in the country’s economic outlook. Speaking at the CIPFA-ICAP Public Financial Management Conference 2025, held at Serena Hotel, the minister claimed the first step would be the issuance of a Panda bond—a yuan-denominated bond aimed at Chinese investors.
Aurangzeb expressed optimism that the inaugural issue could take place before the 2026 unfolds, noting that Prime Minister Shehbaz Sharif’s upcoming visit to China would be an opportunity to advance discussions. “We are very hopeful that before the year is out, we can do the inaugural issue,” he remarked.
Improved Ratings Boost Confidence
The minister credited recent improvements in Pakistan’s macroeconomic stability for creating room to re-engage with global markets. “After a long time, we have the three international rating agencies—Fitch, S&P, and Moody’s—aligned.
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That is external validation of the journey we have been on,” he said. With credit ratings and bond spreads showing positive momentum, Pakistan may also explore other global markets, including Global Medium-Term Notes (GMTN), during the fiscal year.
Staying the Course
Aurangzeb stressed that the key challenge for Pakistan is to break free from its historic boom-and-bust economic cycles. “We are moving in the right direction in terms of sentiment, but we must stay the course,” he said. He emphasized that the recent stability achieved was not an end in itself but a foundation for long-term reform.
Reforms and Future Vision
The minister also outlined progress on domestic reforms. He said the tax filing process has been simplified, while clarifying that policymaking on taxation rests with the Finance Division, not the Federal Board of Revenue.
On state-owned enterprises (SOEs), Aurangzeb noted that 24 entities are under the Privatisation Commission, adding that rightsizing and privatisation would not only cut inefficiencies but also reduce corruption. “That is the real saving to the national exchequer,” he claimed.
Looking ahead, Aurangzeb called for greater private sector leadership in driving Pakistan’s growth, while the government’s role should be to create a supportive ecosystem. He also highlighted climate change as a major existential challenge, urging stakeholders to assist in identifying viable, bankable projects that can capture most of the investment.