Key Takeaways
- Pakistan’s corporate debt market remains underdeveloped, according to Finance Minister Muhammad Aurangzeb.
- Aurangzeb chaired a meeting to accelerate reforms and reduce reliance on bank lending for SMEs.
- The focus is on developing the local currency-linked bond market and enhancing capital markets.
Finance Minister Muhammad Aurangzeb has admitted that Pakistan’s corporate debt market remains underdeveloped, urging accelerated reforms to deepen the debt capital market. At a meeting of the Capital Market Development Council (CMDC), he highlighted the need for diversification in financing methods and emphasized building a more resilient financial system capable of supporting small and medium enterprises (SMEs).
Aurangzeb observed that while the equity market has shown encouraging progress, the corporate debt market is lagging behind. He stressed the importance of expanding engagement beyond large listed companies to include medium-sized enterprises and other growth-oriented businesses.
The meeting reviewed progress on capital market reforms, with a particular focus on accelerating the development of Pakistan’s local currency-linked bond market. The Finance Minister emphasized that this study should provide practical, evidence-based recommendations supported by international benchmarking to guide future reforms.
Participants also discussed awareness and experience surveys conducted by the Securities and Exchange Commission of Pakistan (SECP) to assess challenges faced by top-100 listed companies in accessing corporate debt markets. Aurangzeb highlighted the need for dedicated institutional capacity to accelerate these reforms, advising SECP and the Pakistan Stock Exchange (PSX) to establish Debt Desks at senior management levels.
The Finance Minister also called for fostering a more competitive and efficient capital market ecosystem by encouraging greater institutional capacity and competition among market intermediaries. He stressed the importance of simplifying the corporate debt issuance process through better coordination among SECP, PSX, and the Central Depository Company (CDC).
Aurangzeb underscored the need for a streamlined one-window listing framework supported by standardised procedures, end-to-end process mapping, greater digital integration, and enhanced digital facilitation to improve transparency and ease of access. The Finance Minister’s emphasis on these reforms reflects his commitment to reducing reliance on bank financing and promoting market-based financing options.
The meeting concluded with a focus on practical steps to implement the recommendations from the external study on the development of Pakistan’s local currency-linked bond market. These include enhancing market infrastructure, developing hedging and derivatives markets, and improving overall capital market ecosystem efficiency.
While the equity market has demonstrated encouraging progress, the corporate debt market continues to remain underdeveloped relative to the financing needs of the economy.
Finance Minister Muhammad Aurangzeb, Minister of Finance
The study should provide practical, evidence-based recommendations supported by international benchmarking to guide future reforms.
Finance Minister Muhammad Aurangzeb, Minister of Finance
