Pakistan plans to launch panda bonds, seeks cooperation of capital market investors situated in China: Report…

Pakistan Federal Minister for Finance and Revenue Muhammed Aurangzeb briefed the Governor of People’s Bank of China (PBoC) Pan Gongsheng about Pakistan’s plan to bring out panda bonds during a meeting in Beijing on 26th July 2024, in which they discussed a lot of other economic issues besides this.

Panda bonds are sold in the Chinese domestic market and are denominated in the land’s currency, although they are issued by foreign entities. The Islamic Republic of Pakistan is looking into this as a way to generate more funds and looking to tap into this source. This will lead to diversification of wealth generation sources and strengthen the country’s forex reserves.

The initial issuance is expected to raise between $250 million and $300 million, helping Pakistan to improve its financial stability amid economic challenges like surging inflation rates and declining forex reserves.

Minister Aurangzeb spoke about the government’s economic policy during the meeting in which representatives of other financial institutions were also present.

The finance ministry issued a statement after the meeting where he was quoted saying, “Underlining Pakistan’s plan to issue Panda bonds, Minister for Finance briefed PBoC and other financial institutions about the steps taken so far and sought the cooperation from Chinese institutional investors in the capital market to seek benefit from the pro business policies of the new (Pakistani) government.”

The minister also highlighted Pak’s improving macroeconomic indicators, tax collection reforms and energy sector and also included the point of privatisation of loss making public enterprises.

Applauding Chinese President Xi Jinping’s initiative of building the Belt and Roads Initiative, he reviewed the progress of the flagship China Pakistan Economic Corridor (CPEC) project. The CPEC is critical to Pak as it will strengthen the business to business cooperation with the nation’s private sector getting to play a major role in the development and economic growth. 

The finance minister arrived on Thursday 25th July to discuss structural reforms on power generation as suggested by the IMF. He was also accompanied by Pakistan’s power minister, Awais Ahmed Khan Leghari. The duo is set to take up proposals with their chinese counterparts that is to include the reprofiling of the debt structure in the energy sector amounting to $15 billion.