In a bid to diversify its funding sources, Pakistan has received five bids from Chinese firms to help it raise funds through Panda bonds. This move marks a significant step towards accessing capital from Chinese investors and reducing reliance on traditional funding sources.
Panda bonds, denominated in Chinese yuan (RMB), will allow Pakistan to tap into the vast Chinese capital market, providing an alternative funding avenue. The country plans to raise as much as $300 million through this issuance, a first-time venture into the Chinese debt market.
The finance ministry is currently evaluating the proposals from the Chinese firms, which include three law firms and two credit rating agencies. Two local firms have also expressed interest in working as domestic legal counsels for the bond issuance.
This development comes on the heels of Pakistan’s $7 billion loan program with the International Monetary Fund (IMF), aimed at stabilizing the country’s macroeconomic situation. The Panda bond issuance is expected to further bolster Pakistan’s funding base and provide a new avenue for accessing foreign capital.
Finance Minister Muhammad Aurangzeb emphasized the importance of structural reforms to ensure the success of the IMF program and the Panda bond issuance. He stressed the need for permanence in stabilizing the country through reforms, particularly in taxation, energy, and state-owned entities.
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