Pakistan plans to return to the global bond market after four years, underscoring its progress in economic stabilization after coming close to a default just a few years ago.
The South Asian nation will issue a proposal for advisers in the coming weeks, Finance Minister Muhammad Aurangzeb said. It is still assessing whether to issue a dollar, euro or sukuk bond. The government is also preparing its first ever panda bond within weeks.
At the World Economic Forum in Davos, Pakistan’s delegation led by Prime Minister Shehbaz Sharif is pitching that the country’s economy is in a good place and ready for investments, particularly in minerals, agriculture and technology. The ability to tap the fixed income market is a key part of that strategy.
“We have consolidated our gains in terms of macroeconomic stability,” Aurangzeb said in an interview in Davos. “If you look at every key indicator inflation, interest rates, the fiscal position and the current account the direction of travel has clearly improved.”
Pakistan had effectively been shut out of the bond market since 2022 but adopted fiscally prudent measures as part of bailout programs with the International Monetary Fund. Inflation, which peaked at about 40%, has fallen to single digits. The country has again posted a primary fiscal surplus and has been upgraded by ratings companies.
Foreign exchange reserves are expected to reach three months of import cover in the year ending June, a level seen as a global benchmark, Aurangzeb said. He also sees no immediate pressure on the rupee, citing the real effective exchange rate, a healthier balance of payments, strong remittance inflows and growth in services exports. The rupee has remained stable for almost 18 months.
The finance minister said macroeconomic stabilization has gone hand in hand with long delayed structural reforms, including the sale of government owned companies and an expansion of the tax net. The national flag carrier was sold last month. The government is now seeking to sell a stake in the Roosevelt Hotel in New York, outsource the management of major airports, and divest nearly two dozen other companies.
Aurangzeb said the government’s priority is to shift toward export led growth to avoid the import driven expansions that have repeatedly triggered balance of payments crises.
“We have to stay the course on reforms,” he said. “That’s the only way to move toward sustainable growth.”
