Pakistan to launch Panda Bonds this year that will allow to solidify its financial position.
Pakistan is set to introduce yuan-denominated bonds this year to strengthen its financial position, according to Finance Minister Muhammad Aurangzeb. The government remains optimistic about meeting the terms of the International Monetary Fund’s (IMF) bailout program.
The country plans to raise $200 to $250 million from Chinese investors within six to nine months, Aurangzeb shared in a television interview with Bloomberg. This move aligns with the nation’s recent sovereign rating upgrades by all three credit agencies, with aspirations of achieving a “single-B” category to re-enter global bond markets.
Aurangzeb highlighted Pakistan’s focus on issuing Panda bonds and tapping into Chinese capital markets, noting that this opportunity had been overlooked in the past. The latest target is slightly lower than the $300 million goal stated earlier in March 2024, with China International Capital Corporation advising on the bond issuance.
Pakistan has achieved some economic stability since securing the IMF bailout, which was once uncertain, and tackling inflation and high interest rates. The government aims to increase the tax-to-GDP ratio to 13.5% from 10% in December, aligning with IMF requirements. Aurangzeb emphasized that this goal is critical for sustainable fiscal health.
The bailout has brought some relief, including reduced inflation, allowing policymakers to lower borrowing costs. Strong remittances have bolstered currency reserves, leading to a 2% rise in the rupee in 2024 and making it one of the top-performing emerging market currencies. The benchmark stock index also outperformed most other equity markets last year.
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