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Pakistan has established a $1 billion Panda Bond program in China, marking a key step in diversifying the country’s external financing portfolio. The move is part of the government’s broader strategy to expand access to international capital markets while maintaining stability in debt management.
According to official documents, external financing will continue to rely primarily on multilateral and bilateral sources, which provide concessional terms and longer maturities. However, to broaden market access, the government now plans to re-enter global capital markets through Panda Bonds, Sustainable Bonds, and Eurobonds, depending on favorable global interest rate conditions and macroeconomic stability.
Under the newly launched program, Pakistan will issue an inaugural tranche of $200–250 million in fiscal year 2026, with additional issuances expected in the medium term. The Panda Bond initiative is seen as a critical step in mobilizing financing on more flexible terms and strengthening financial ties with Chinese markets.
Preparatory work is also underway for the issuance of Sustainable Bonds, supported by a Sustainable Financing Framework that has been finalized and is currently under Cabinet review. This framework will act as the foundation for upcoming sustainable bond issuances, ensuring alignment with international investor demand.
The structure of these instruments, including maturity periods, repayment terms, and interest rate types, will be designed to attract diverse investors. By introducing the Panda Bond program in China alongside plans for Sustainable and Eurobonds, Pakistan aims to reduce its reliance on traditional lenders and secure more balanced financing options.
