Pakistan is set to enter China’s capital markets for the first time through a yuan-denominated Panda bond next week, Finance Minister Muhammad Aurangzeb announced on Saturday, as Islamabad moves to strengthen foreign exchange reserves and reduce reliance on traditional external lenders.
“God willing, next week you will hear good news that for the first time, we will be accessing Chinese capital markets through Panda bond,” Aurangzeb said while addressing a press conference alongside Petroleum Minister Ali Pervaiz Malik.
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The planned $250 million issuance forms part of a wider $1 billion programme and will carry guarantees from the Asian Development Bank and the Asian Infrastructure Investment Bank. Officials believe the guarantees will improve investor confidence and reduce borrowing costs for Pakistan.
A Panda bond refers to yuan-denominated debt issued by foreign governments or institutions in China’s domestic bond market. Analysts say Pakistan’s entry into the market signals deepening financial cooperation between Pakistan and China at a time when Islamabad faces mounting external financing requirements.
Pakistan has relied heavily on friendly nations and multilateral institutions since the 2023 balance-of-payments crisis pushed the economy close to sovereign default. The country secured an IMF bailout package last year after implementing difficult fiscal reforms, increasing taxes and tightening subsidies.
According to Reuters, Islamabad has also explored funding options in Gulf markets while seeking to diversify external borrowing sources beyond conventional dollar-based debt.
IMF support and reserve pressures
Aurangzeb’s remarks came days after the International Monetary Fund approved the release of about $1.32 billion under two ongoing lending programmes for Pakistan, providing temporary support to the country’s foreign exchange reserves.
The finance minister said the government was also evaluating Eurobonds, commercial borrowing and support from allied countries to replace a $3.5 billion financing facility from the United Arab Emirates.
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Pakistan is also expecting additional financial support from Saudi Arabia in the coming months as policymakers attempt to stabilise reserves and maintain import cover.
The country remains vulnerable to external shocks because of its dependence on imported fuel and liquefied natural gas. Regional tensions linked to the Iran war and concerns around disruptions in the Strait of Hormuz have added pressure to global energy markets in recent months.
Despite these challenges, Aurangzeb said several economic indicators pointed toward recovery.
He said Pakistan’s large-scale manufacturing sector recorded 11% year-on-year growth in April, while cumulative growth during the first nine months of the current fiscal year stood at 6.5%.
“The government expected the GDP growth rate to remain close to 4% during the current fiscal year, compared to 3.1% last year,” he said.
Exports and remittances show momentum
Aurangzeb also highlighted strong export and remittance figures, calling them evidence of growing confidence in Pakistan’s economy.
“Exports have grown by 9% month-on-month and 14% year-on-year, driven by value-added textiles, IT and other sectors,” he said, adding that the growth remained broad-based across industries.
Pakistan’s IT exports have remained one of the fastest-growing segments of the economy, supported by freelancing, software services and overseas demand for digital solutions.
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The finance minister said workers’ remittances reached $3.5 billion in April after touching $3.8 billion during Ramazan in March.
He described the sustained inflows as “a strong sign of confidence from overseas Pakistanis” despite uncertainty in the global economy.
Aurangzeb added that inflows under the Roshan Digital Account surged to $320 million in April, marking the highest monthly figure since the programme’s launch.
“This is an investment-led discussion. Overseas Pakistanis are investing in New Pakistan Certificates, real estate and the stock market,” he said.
Economists say the success of the planned Panda bond issue could open another financing channel for Pakistan and strengthen investor sentiment at a time when the government seeks durable economic stability after years of crisis-driven borrowing.
