Pakistan gives yuan-denominatedPanda bonds“In early June, the South Asian country’s finance minister said the move would help Beijing’s efforts to expand its capital markets with China’s.
Mohammad Aurangzeb, in an exclusive interview with The Post on Sunday, promised greater cooperation with Beijing in the next phase of preparations. China-Pakistan Economic Corridor (CPEC) – a key initiative to boost bilateral trade and investment.
He called for greater involvement from China’s private sector and export-led industries to transform Pakistan’s debt-ridden economy.
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Pakistan plans to raise $200 million to $250 million from Chinese investors, Aurangzeb said, adding that it is “absolutely critical” for the country to diversify its financial base.
The minister will be in Hong Kong for two days Asian Financial ForumIt started on Monday.
“Since I took office (in March 2024), I have been very vocal about this – that we want to go for a panda bond, we want to go for an open sovereign panda bond… I will try to see if I am pushing everyone, including our own team. We can do this before June,” Aurangzeb said.
Panda bonds – traditionally denominated in yuan and issued in China by non-Chinese firms – have found high demand as traders and countries seek to shed excess reliance on the US dollar and hit the world’s second-largest economy at a dizzying pace.
The minister added that Pakistan has followed Egypt’s lead in issuing yuan bonds on Beijing-led credit reforms. Asian Infrastructure Investment Bank (AIIB)
Last year, Egypt secured a panda bond from AIB and the African Development Bank to cover principal and interest on the domestic Chinese market.
“I have met the president of the AIIB in Washington … with a clear view that we will repeat what Egypt has done in terms of credit reform … which will allow us to access domestic capital markets for the Panda Bond,” he said.
Aurangzeb added that Pakistan will help to support the “international relations of the renminbi” and promote cooperation in the “world’s second-largest and second-deepest capital market”.
Pakistan is said to be eyeing a Eurobond issue in 2026 despite its low credit rating. Aurangzeb, however, said the administration would try to get at least one major rating agency’s “single-B” category.
Pakistan has endured years of inflation and in 2010 In 2023, its economy was pushed into recession by political chaos and economic deprivation.
The country’s economy grew last year as inflation dropped from nearly 38 percent in May 2023 to 4.1 percent last month.
The International Monetary Fund and Pakistan agreed to a 37-month extended bailout of nearly $7 billion, and some of the country’s major creditors, including China, agreed to a one-year debt waiver last year.
During what he called the “balance of payments problem”, Aurangzeb said that increasing the CPEC 2.0 cooperation would be crucial and said that the new version of the flagship Belt and Road Initiative project would help the country to reduce its debt through an export-led model.
CPEC is a key project under Beijing’s Belt and Road Initiative and has pledged more than $65 billion for development in Pakistan, including roads and railways.
The second phase of the project, according to Pakistan, aims to cooperate with China to improve the country’s agriculture and information technology sectors by establishing special economic zones and attracting Chinese companies to relocate low-level industries to the country.
Season Their meeting Last June, Chinese President Xi Jinping and Pakistan’s Prime Minister Shehbaz Sharif made an update to the CPEC project.
Aurangzeb said Pakistan was in trouble because its economy was mainly domestically driven, causing the country to “lose foreign exchange and face a balance of payments problem”.
Chinese President Xi Jinping and Pakistani Prime Minister Shehbaz Sharif met in Beijing last June. Photo: Reuters alt=Chinese President Xi Jinping and Pakistani Prime Minister Shehbaz Sharif met in Beijing last June. Photo: Reuters.>
“This means we have to fundamentally change the DNA of the economy to export-led growth,” he added.
“Chapter two of CPEC is mainly about business-to-business, especially the economic zones. We want some companies to come in from the mainland and use it as a real export hub.”
“Chapter one of CPEC was about infrastructure, and that’s where most of the debt came in… (if) we go to phase two, where we go into export industries… we can generate enough dollars and… pay off this debt,” he added.
Aurangzeb also promised to strengthen his country’s security to continuously protect Chinese companies. Deadly attacks In the region, target some Chinese interests and workers.
