Pakistan to Issue Yuan-Denominated Bonds to Raise $200-250 Million
Pakistan plans to issue yuan-denominated bonds this year to raise between $200 million and $250 million from Chinese investors over the next six to nine months. This initiative, revealed by Finance Minister Muhammad Aurangzeb during an interview at the Asian Financial Forum in Hong Kong, marks the country’s first attempt to tap into the Chinese capital markets. The plan was advised by China International Capital Corporation and is considered a long-overdue move by the government.
Minister Aurangzeb expressed optimism about further upgrades, targeting a move into the “single-B” category, which would pave the way for Pakistan to reaccess global bond markets. While the initial target was $300 million, the revised goal is slightly lower due to evolving market conditions.
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In addition to this, Pakistan is focusing on fulfilling the International Monetary Fund’s (IMF) requirements under a $7 billion loan program. The IMF is scheduled to review the country’s progress next month, with a key condition being the increase of the tax-to-GDP ratio to 13.5%.
The country has shown signs of economic stabilization following the IMF bailout in 2024. Inflation has eased, interest rates have dropped to a two-year low, and both remittances and currency reserves have seen an uptick. The rupee appreciated by 2% in 2024, and the Pakistan Stock Exchange (PSX) significantly outperformed Asian markets.
However, achieving the next $1 billion tranche from the IMF hinges on raising taxes to meet fiscal targets for the year ending June 2025. Aurangzeb stressed the importance of long-term reforms in the energy sector, taxation, and state-owned enterprises to break the cycle of debt dependency.
The government projects GDP growth of 3.5% for the fiscal year ending June, with inflation expected to stabilize within a range of 5–7% over the coming year.
