Pakistan to Launch First $200-250 Million Panda Bonds in Chinese Market This Year

Pakistan plans to issue yuan-denominated bonds this yea to raise $200–250 million from Chinese investors over the next six to nine months, Finance Minister Muhammad Aurangzeb revealed during an interview at the Asian Financial Forum in Hong Kong on Monday. The initiative has been undertaken on advisement by China International Capital Corporation and is part of the country’s effort to tap into the Chinese capital markets for the first time. The Finance Minister called it a long-overdue move. Aurangzeb expressed optimism about further upgrades, targeting entry into the “single-B” category to reaccess global bond markets. The current target is slightly reduced from the $300 million projected earlier in 2024, reported Bloomberg. Pakistan is also focused on meeting the International Monetary Fund’s (IMF) conditions under a $7 billion loan program. The lender is set to review progress next month and demands an increase in the tax-to-GDP ratio to 13.5 percent. Economic indicators have shown signs of stabilization since Pakistan secured the IMF bailout last year. Inflation has eased, interest rates have reached a two-year low, and remittances and currency reserves have increased. The rupee appreciated by 2 percent in 2024, and PSX outperformed Asian markets by a mile. However, Pakistan must raise taxes to secure the next $1 billion tranche or risk missing the IMF’s fiscal targets for the year ending June 2025. Long-term reforms in energy, taxation, and state-owned enterprises are critical to breaking the cycle of debt dependency, Aurangzeb added. The government expects GDP growth of 3.5 percent for the fiscal year ending June, while inflation is projected to stabilize within a 5–7 percent range over the next year.