KARACHI: Finance Minister Muhammad Aurangzeb has said that the country is preparing to launch yuan-denominated Panda bonds this year to shore up its finances, Dawn.com reported on Monday.
The country is planning to raise $200 million to $250m from Chinese investors over the next six to nine months, the finance minister told Bloomberg in an interview.
Panda bonds are a type of debt security issued by foreign entities in the Chinese capital markets, and they are denominated in Chinese yuan (RMB).
In March last year, the finance minister announced that Pakistan was keen to tap Chinese investors by selling as much as $300m in Panda bonds.
Says Pakistan to achieve 13.5pc tax ratio in FY25
These bonds allow foreign issuers, including multinational corporations, international financial institutions, and sovereign governments, to access capital from Chinese investors.
“The country is very keen to tap the panda bonds and the Chinese capital markets,” Mr Aurangzeb said according to the report. “We have been remiss as a country not to tap it previously.”
Speaking on the sidelines of the Asian Financial Forum in Hong Kong, the minister also confirmed that the International Monetary Fund (IMF) mission is scheduled to visit Pakistan next month, adding that it wanted the country to broaden its tax base and reach a tax-to-GDP ratio of 13.5 per cent, from 10pc in December.
“We are well on our way to achieving that target, not only because the IMF is saying that but because, from my perspective, the country needs to get into that benchmark to make our fiscal situation sustainable,” he said.
The IMF’s executive board approved a 37-month $7bn Extended Fund Facility in September to enable the country to “cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth”.
In July, global rating agency Fitch also upgraded Pakistan’s long-term foreign-currency issuer default rating (IDR) to CCC+ from CCC on the back of the country’s deal, while Standard and Poor’s (S&P) maintained its rating of CCC+.
According to the report, Pakistan has undergone 25 loan programmes over half a century, with the IMF insisting the country institute “durable reforms in key areas of the energy sector, tax collection and state-owned enterprises to end a cycle of indebtedness”.
Aurangzeb also told Bloomberg that the country’s gross domestic product (GDP) “will probably expand 3.5pc in the fiscal year ending June”.
“We are into that phase of stabilisation,” Aurangzeb stated. “Now, where do we go from here? We have to focus on sustainable growth. We are now very focused on fundamentally changing the DNA of the economy to make it export-led.”
The State Bank of Pakistan (SBP), which lowered its key interest rate to 13pc in December, cited that growth prospects had somewhat improved, and it had managed to keep inflationary and external account pressures in check.
Published in Dawn, January 14th, 2025
