The federal government has decided to introduce Hybrid Sukuk Bonds during the current fiscal year. The new financing instrument is part of its plan to expand funding sources and strengthen Islamic financing in Pakistan.
Officials at the Ministry of Finance said the proposed Hybrid Sukuk Bonds will be different from previous Sukuk issuances. Traditional Sukuk mainly rely on government assets pledged as backing. The new model will combine asset-backed financing with commodity-based transactions.
Under the proposed structure, the government will also be able to raise funds through the sale of commodities in the market. This approach is expected to provide greater flexibility in mobilizing financial resources.
According to officials, a third-party institution will be appointed to facilitate commodity transactions. The commodities will be sold directly in the market as part of the financing process. This mechanism will become an important feature of the new Hybrid Sukuk Bonds framework.
Before launching the issuance, the Ministry of Finance plans to brief the International Monetary Fund (IMF) on the proposal. Officials said the government wants to keep the lender informed before moving ahead with the new financing arrangement.
The ministry has also asked the National Highway Authority (NHA) to provide details of assets that can support the Sukuk structure. These assets will be used as part of the backing required for the Islamic bonds.
Officials estimate that the value of NHA assets has increased significantly. The total value is now estimated at more than Rs. 7 trillion. During the previous fiscal year, those assets were valued at around Rs. 5.5 trillion.
The higher valuation is expected to increase the government’s borrowing capacity. It will also allow the government to issue a larger volume of Sukuk under the proposed financing framework.
Unlike conventional bonds, Sukuk are structured to comply with Islamic financial principles. Instead of earning interest, investors receive returns linked to underlying assets or approved commercial activities.
The planned Hybrid Sukuk Bonds introduce a new element by combining asset-backed financing with commodity sales. Officials believe this structure will broaden the government’s financing options while maintaining compliance with Shariah principles.
The government is also working to diversify its borrowing sources as it manages fiscal requirements during the current financial year. Expanding Islamic financing instruments is seen as one way to attract a wider range of local and international investors.
Officials said the final issuance will move forward after consultations with the IMF and other relevant stakeholders. The government is expected to complete the necessary preparations before launching the new instrument.
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If implemented, Hybrid Sukuk Bonds will mark an important development in Pakistan’s Islamic finance market. The initiative could provide the government with an additional funding source while supporting the growth of Shariah-compliant financial products in the country.
