Key Takeaways
- Finance Minister Muhammad Aurangzeb discusses plans for rupee-denominated, dollar-settled bonds.
- The government aims to diversify borrowing sources and deepen debt capital markets.
- Pakistan is exploring tokenisation of existing Eurobond debt to attract more investors.
Finance Minister Muhammad Aurangzeb has announced that the Ministry of Finance is working on a rupee-denominated, dollar-settled bond, as well as exploring the tokenisation of some existing Eurobond debt. These measures are part of a broader strategy to diversify Pakistan's borrowing sources and broaden the investor base.
Speaking at the 'Mobilising Private Capital: National Strategic Dialogue on PPPs and Privatisation' organised by the Asian Development Bank (ADB), Aurangzeb highlighted the need to focus on Pakistan's stagnant goods exports, which currently stand at around USD 30 billion, to sustain economic growth.
The minister stated that excessive reliance on the domestic banking system for government borrowing is not sustainable and that the government is committed to deepening Pakistan's debt capital markets. He noted that the government has already mandated institutions to work on this initiative, though specific details such as the proposed bond's size, maturity, or issuance timeline were not disclosed.
Aurangzeb also mentioned that Pakistan is following Hong Kong's experience with digital debt instruments, indicating a willingness to explore innovative financial tools to attract more investors. The government has taken steps to facilitate retail investment in government securities, including collaboration with JazzCash, and the State Bank of Pakistan has launched an application enabling individuals to invest directly in government securities.
On the external sector, the minister highlighted strong remittance inflows and growth in IT export services, which have supported Pakistan's external position. However, he noted that goods exports have remained broadly flat at around USD 30 billion, and stressed the need for greater focus in this area.
The government is committed to maintaining macroeconomic stability and moving the economy from stabilisation towards sustainable growth, while continuing structural reforms. Aurangzeb reported that Pakistan has made significant progress in addressing the structural twin deficit, which has declined from 12.5 percent of GDP to 2.6 percent over the last two-and-a-half to three years.
He also highlighted the transformation of the Federal Board of Revenue (FBR) in terms of people, processes, and technology, which has led to a 40 percent increase in revenues over the past two years. The tax-to-GDP ratio has improved from 8.8 percent to 10.3 percent and is expected to reach 11-12 percent in the short term.
The minister stated that the government is simultaneously working to contain expenditures, including the cost of running the civil government and debt servicing. He also noted that energy sector reforms, state-owned enterprises (SOEs), and privatisation are closely interconnected, with 27 transactions assigned to the Privatisation Commission and some SOEs considered 'beyond repair' and closed, including Utility Stores Corporation, PASCO, and PWD.
Pakistan has received three sovereign credit-rating upgrades since April 2025, enabling the government to explore new borrowing opportunities. These upgrades are seen as a positive indicator for the country's economic health and potential for future growth.
We have already mandated institutions who are going to work with us on this.
Muhammad Aurangzeb, Finance Minister
We really do need to work on debt capital markets to bring a more diversified investor base, whether it’s insurance, NBFIs, to diversify out of the banking system.
Muhammad Aurangzeb, Finance Minister
