- We would like to opt for the first sovereign Panda Bond: Aurangzeb.
- Moved aimed at integrating its capital markets with that of China.
- The minister will begin a delegation visit to the chief executive of Hong Kong.
ISLAMABAD: Federal Minister for Finance and Revenue Muhammad Aurangzeb said Pakistan is exploring more joint ventures with Hong Kong and secondary listings for its companies in the city.
In an exclusive interview with the South China Morning PostFinMin Aurangzeb said he would express interest to Chief Executive John Lee Ka-chiu on the possibility of sending a delegation from Hong Kong to visit Pakistan to identify areas for closer collaboration.
“If there is an opportunity for Pakistani companies, in the form of joint ventures with local companies, to come and list and do primary and secondary listings on the Hong Kong Stock Exchange, for example, I think that can to be truly win-win, and not only in terms of the investments we expect in Pakistan, but also the investments abroad,” he said.
The minister’s remarks come against the backdrop of his visit to Hong Kong for the two-day Asian Financial Forum, which kicked off on Monday.
Panda Bonds
To explore other funding opportunities, he told the Job that Pakistan will issue yuan-denominated Panda bonds from June to further integrate its capital markets with those of China.
Aurangzeb said Pakistan aims to raise $200-250 million from Chinese investors in the first phase.
“Since I took office (in March 2024), I have been very clear on this point: we want to opt for Panda Bonds, a first sovereign Panda Bond (….). I encourage everyone, including including our own teams, to see if we can do it before June,” he said.
The minister added that Pakistan had followed Egypt’s lead in issuing yuan bonds thanks to credit enhancement from the Beijing-led Asian Infrastructure Investment Bank (AIIB).
He said Pakistan had endured inflation for years and had been pushed to the brink of default in 2023 as its economy withered into political chaos and economic mismanagement.
But the country’s economy rebounded last year, with the inflation rate falling from nearly 38% in May 2023 to 4.1% last month.
The International Monetary Fund (IMF) and Pakistan also reached an agreement on an extended bailout loan of around $7 billion over 37 months, with some of the country’s largest debt holders, including China, agreeing to the last year a one-year refinancing.
Next phase of CPEC
The minister also assured increased cooperation with Beijing on the next phase of the China-Pakistan Economic Corridor (CPEC) – a key initiative to boost bilateral trade and investment.
Amid what he called the “balance of payments problem”, Aurangzeb said it would be crucial to strengthen cooperation with CPEC, adding that the latest version of the Belt and Road Initiative’s flagship project and the Road” would help the country digest its debt through an export-oriented model.
The second phase of the project, according to Pakistan, aims to create special economic zones in partnership with China to reform the country’s agricultural and IT sectors while incentivizing Chinese companies to relocate their low-end industries to the country.
Aurangzeb said Pakistan was in trouble because the economy was “mainly import-driven”, which caused the country to “run out of foreign exchange and find itself in a balance of payments problem”.
“Which means we need to fundamentally change the DNA of the economy towards export-led growth,” he added.
“We want to get some companies from the continent to set up there and use it as a real export hub.” He also assured to strengthen security in his country to protect Chinese companies.