ISLAMABAD: Pakistan is expected to enter China’s capital market for the first time next week through the launch of a yuan-denominated Panda bond, Finance Minister Muhammad Aurangzeb said on Saturday.

Speaking at a press conference, Aurangzeb said the planned Panda bond issue would mark Pakistan’s first direct access to Chinese capital markets as the government seeks to diversify external financing sources and strengthen foreign exchange reserves.

The initial issuance is expected to raise $250 million and forms part of a broader $1 billion programme. According to the finance minister, the bond will be backed by the Asian Development Bank and the Asian Infrastructure Investment Bank.

Aurangzeb said Pakistan’s economy was showing signs of recovery, citing improvements in exports and remittances. However, he noted that the war in Iran and the closure of the Strait of Hormuz had created pressure on the economy due to Pakistan’s dependence on imported fuel and gas.

IMF funding and external financing plans

The finance minister’s remarks came after Pakistan received around $1.32 billion in fresh funding from the International Monetary Fund under two ongoing loan programmes.

Aurangzeb said the government was also exploring additional financing options, including Eurobonds and commercial borrowing, to manage external liabilities and maintain foreign exchange reserves.

According to the minister, Pakistan is seeking alternatives to replace a $3.5 billion financing facility from the United Arab Emirates while awaiting additional financial support from Saudi Arabia to help bridge the country’s financing gap.

The planned Panda bond issuance is part of broader efforts by the government to stabilise the economy and improve investor confidence following recent financial reforms and international lending support.

Also read: Pakistan to Launch $250 Million Panda Bond in January