KARACHI: Pakistan has issued the inaugural Shariah-compliant Green Sukuk bonds worth Rs30 billion ($106 million), its finance minister said on Friday, amid Islamabad’s plans to launch innovative “funding products” for local and foreign investors.
The Pakistani government this month approved the issuance of Green Sukuk that has been structured to support projects aligned with environmental sustainability, including renewable energy and green infrastructure initiatives, marking a milestone in sustainable finance.
The inaugural $106 million bonds, which will be listed on the Pakistan Stock Exchange, has brought the percentage of the South Asian nation’s Shariah-compliant bonds to about 14 percent in our overall debt profile, according to Finance Minister Muhammad Aurangzeb.
“Climate change is an existential threat for Pakistan,” the minister said at a gong ceremony at the stock market in Karachi. “The proceeds of this Green Sukuk are going to be used for key water-related infrastructure projects across Pakistan.”
Pakistan has seen erratic changes in its weather patterns which have led to frequent heat waves, untimely rains, cyclones and droughts in recent years. Scientists have blamed the events on human-driven climate change. In 2022, devastating floods, blamed on human-driven climate change, killed more than 1,700 Pakistanis, affected another 33 million and caused the country over $30 billion in economic losses.
In November, Pakistan received $500 million from the Asian Development Bank (ADB) as proceeds of a loan for the Climate Change and Disaster Resilience Enhancement Program, while the World Bank in January pledged $20 billion in loans to Pakistan under its 10-year framework that focuses among other things on the country’s increased resilience to climate-related disasters and better food security.
Last week, the International Monetary Fund (IMF) also approved $1.4 billion in climate financing for Pakistan.
“This is all there for us to use vis a vis adaptation, financing but also with very concrete reform measures which are required,” Aurangzeb said.
“One should never be complacent about the financing because the gap that we talk about is a very big gap but we should at least use the financing that is available for now.”
Pakistan is in the process of restructuring and reorganizing our debt management office in line with global best practices, according to the finance minister.
The South Asian country will soon be launching various funding products in terms of the demand that it has to meet domestically as well as with international investors.
“We will continue to engage the investor community very proactively to get your feedback,” he said. “So stay tuned. You will be hearing more from this space as we go forward.”
