KARACHI: With an aim to generate $500 million to $1 billion worth of financing, Pakistan’s federal cabinet on Thursday agreed to float the first Panda Bonds in the Chinese market within the next three months.
“This will be the first time in the history of Pakistan that the country will enter the Chinese market,” Information Minister Fawad Chaudhry said while addressing a news conference in Islamabad after the meeting.
Talking to Arab News, Dr. Khaqan Hassan Najeeb, Spokesperson of the Ministry of Finance said: “The size, tenure, and pricing of the bonds will be determined on the basis of the market response at the time of their issuance.” He also maintained that the government was hoping to have several rounds of issuance.
Faced with financial shortages to fill an external payments gap, the government has adopted a multi-pronged approach to address its financing needs and build foreign exchange reserves, officials from the finance ministry said.
“The idea of issuing these bonds is a well thought out decision since it was taken after discussions with the Chinese banks, investment groups, and regulatory agencies,” Dr. Najeeb added.
“The bonds will also help the government diversify the investor base of the capital market issuance and provide a source for raising Renminbi,” he said, adding that the “process will start in the next two to three months”.
Pakistan expects a good response from Chinese investors, considering the interest of various Chinese banks and investment groups in the proposal. “It will be interesting to see how much our finance division manages to generate after an open bidding process, and how it determines the exact size, tenor, and price on the basis of the market response at the time of issuing these bonds,” Dr. Ikram ul Haq, an expert on economic and taxation issues, said.
At this stage, Islamabad plans to float the bonds in three phases, with a target of $500 million to $1 billion in the first year. The process is expected to continue for at least three years, targeting up to $2 billion.
Pakistan is currently negotiating with friendly countries, international donors, and lending agencies, including the International Monetary Fund (IMF), to meet its financial requirements. According to Finance Minister Asad Umar, Pakistan wants to avoid the IMF since it is likely to set tough conditions ahead of the deal.
However, experts believe that the country is trying to explore the option of Panda Bonds after it found it difficult to secure a package from the IMF, in addition to substantial support, grant, and loans from China too. It is pertinent to note that Sri Lanka, the Philippines, the UAE, Hungry, and Poland have successfully issued such bonds in the past.
“For Pakistan, it will be a temporary relief on the balance-of-payments front, though it will further increase our already unsustainable foreign debt. The funding trade deficit with China through Panda Bonds will not solve our fundamental problem of building an economy that gets rid of imports even for exports,” Dr. Haq said.
He continued that there were not too many short-term quick fixes for Pakistan anymore. “We need to go for fundamental and structural reforms and then seek support from the IMF, Asian Development Bank (ADB), and World Bank (WB),” he added.
Pakistan to float first Panda Bonds in Chinese market
Pakistan to float first Panda Bonds in Chinese market
- To launch initiative within the next three months
- Experts believe move will provide temporary economic relief to the country
UK announces ‘major reset’ of Pakistan development partnership with new trade, climate, education initiatives
- UK commits to increased investment-led cooperation in climate, business regulation and higher education
- London shifts from aid donor to investment-focused partner as bilateral trade crosses $7.3 billion
ISLAMABAD: The United Kingdom on Wednesday unveiled what it called a “major reset” in its development partnership with Pakistan, announcing new investment-focused cooperation, education programs and a bilateral climate compact during a visit by UK Minister for Development Jennifer Chapman.
The trip marks the first federal-level development dialogue between the two governments in eight years and reflects London’s shift from a traditional aid-donor role toward investment-based partnerships. The British government said the new approach aims to use UK expertise to help partner economies build capacity and unlock domestic growth.
Pakistan-UK trade has also reached a record high, crossing £5.5 billion ($7.3 billion) for the first time, with more than 200 British firms now active in Pakistan, an increase London says signals growing two-way commercial confidence.
“Pakistan is a crucial partner for the UK. We work together to tackle the drivers behind organized crime and illegal migration, keeping both our countries safer,” Chapman was quoted as saying in a statement by the British High Commission in Islamabad.
“Our strong bilateral trading relationship brings jobs and growth to us both. And we’re working together to tackle climate change, a global threat.”
The minister and Prime Minister Shehbaz Sharif on Tuesday jointly launched a package of business regulatory reforms aimed at improving Pakistan’s investment climate and making it easier for UK firms to operate. Officials said the initiative supports Pakistan’s economic recovery agenda and creates new commercial avenues for British companies.
A second key announcement was the next phase of the Pak-UK Education Gateway, developed with the British Council and Pakistan’s Higher Education Commission. The expanded program will enable joint research between universities in both countries, support climate- and technology-focused academic collaboration, and introduce a startup fund to help commercialize research. The Gateway will also promote UK university courses delivered inside Pakistan, giving students access to British degrees without traveling abroad.
Accompanied by Pakistan’s Minister for Climate Change Dr. Musadik Malik, Chapman also launched a Green Compact, a framework for climate cooperation, green investment, environmental protection and joint work at global climate forums.
The UK emphasized it remains one of Pakistan’s largest development partners, citing ongoing work in education, health, climate resilience and anti-trafficking capacity building.
During the visit to Pakistan, Chapman will meet communities benefiting from UK-supported climate programs, which London says helped 2.5 million Pakistanis adapt to climate impacts in the past year, and observe training of airport officers working to prevent human trafficking.
“We remain firm friends of Pakistan, including in times of crisis, as shown through our floods response,” Chapman said. “And we know to accelerate growth in both our countries, we must work together in partnership to tackle the problems we face.”
