MoF working on rupee-denominated, dollar-settled bond: Aurangzeb

Finance Minister Muhammad Aurangzeb disclosed on Friday that the Ministry of Finance is developing a rupee-denominated, dollar-settled bond, while also considering tokenising some of its existing Eurobond debt. Speaking at the "Mobilising Private Capital: National Strategic Dialogue on PPPs and Privatisation," hosted by the Asian Development Bank (ADB), Aurangzeb emphasized the necessity of reducing reliance on the domestic banking system for government borrowing and diversifying the investor base through insurance companies and non-banking financial institutions (NBFIs). He stated that deepening Pakistan's debt capital markets is crucial for achieving this goal.

Aurangzeb also highlighted efforts to facilitate retail investment in government securities, including collaborations with JazzCash and the launch of a State Bank of Pakistan app for individual investments in government securities. Regarding the external sector, he noted the positive impact of strong remittance inflows and growth in IT export services, with IT exports reaching $4.6 billion last year, including $1.6 billion from freelancers.

However, he emphasized the need to address the stagnation in goods exports, which remained around $30 billion.

The Finance Minister stressed the government's commitment to maintaining macroeconomic stability and transitioning from stabilization to sustainable growth, while continuing structural reforms. He reported significant progress in reducing the twin deficit, which had declined from 12.5% of GDP to 2.6% over the last two-and-a-half to three years.

Increased revenues, driven by tax reforms and technology improvements, supported fiscal improvement, with the tax-to-GDP ratio growing from 8.8% to 10.3%. Aurangzeb also discussed the interconnection between energy sector reforms, state-owned enterprises (SOEs), and privatization, emphasizing the importance of structural reforms in the energy sector for progress on SOEs and privatization.

Pakistan has received three sovereign credit-rating upgrades since April 2025, allowing the country to rejoin international capital markets after a four-year hiatus. The latest USD 3 billion transaction had orders equivalent to twice the amount issued, with participation from investors in Asia, the Middle East, Europe, and the United States.

Aurangzeb expressed optimism about Pakistan's economic direction, aiming for economic growth above 4% during the current fiscal year and increasing foreign exchange reserves from $18.4 billion to $21 billion by the end of the fiscal year. He urged greater participation of domestic investors and conglomerates in privatization transactions to signal confidence to foreign investors.