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

ISLAMABAD: Finance Minister Muhammad Aurangzeb on Friday said the Ministry of Finance was working on a rupee-denominated, dollar-settled bond and exploring the possibility of tokenising some existing Eurobond debt, while stressing the need to focus on Pakistan’s stagnant goods exports of around USD 30 billion to sustain economic growth. Addressing the “Mobilising Private Capital: National Strategic Dialogue on PPPs and Privatisation” organised by the Asian Development Bank (ADB), the minister said the government was seeking to diversify its borrowing sources and reduce its over-reliance on the domestic banking system. “We have already mandated institutions who are going to work with us on this, ” Aurangzeb said, without disclosing the proposed bond’s size, maturity or issuance timeline. He said excessive dependence on banks for government borrowing was not sustainable and stressed the need to deepen Pakistan’s debt capital markets and broaden the investor base. “We really do need to work on debt capital markets to bring a more diversified investor base, whether it’s insurance, NBFIs, to diversify out of the banking system, ” he said. Aurangzeb also disclosed that Pakistan was exploring tokenisation of some of its existing Eurobond debt, following Hong Kong’s experience with digital debt instruments. The minister said the government had also taken steps to facilitate retail investment in government securities, including collaboration with JazzCash, while the State Bank of Pakistan had launched an application enabling individuals to invest directly in government securities. On the external sector, Aurangzeb said strong remittance inflows and growth in IT export services had supported Pakistan’s external position. IT exports reached USD 4. 6 billion last year, including USD 1. 6 billion contributed by freelancers. However, he noted that goods exports had remained broadly flat at around USD 30 billion, describing this as an area requiring greater focus going forward. The minister said the government was committed to maintaining macroeconomic stability and moving the economy from stabilisation towards sustainable growth, while continuing structural reforms. He said Pakistan had made significant progress in addressing the structural twin deficit, which had declined from 12. 5 percent of GDP to 2. 6 percent over the last two-and-a-half to three years. According to Aurangzeb, fiscal improvement was supported by increased revenues following the transformation of the Federal Board of Revenue (FBR) in terms of people, processes and technology, with revenues growing 40 percent over the past two years. He said the tax-to-GDP ratio had improved from 8. 8 percent to 10. 3 percent and needed to reach 11-12 percent in the short term. The government was simultaneously working to contain expenditures, including the cost of running the civil government and debt servicing, he added. Aurangzeb said energy sector reforms, state-owned enterprises (SOEs) and privatisation were closely interconnected, stressing that structural reforms in the energy sector were essential for progress on SOEs and privatisation. He said 27 transactions had been assigned to the Privatisation Commission, while some SOEs considered “beyond repair” had been closed, including Utility Stores Corporation, PASCO and PWD. The minister said Pakistan had received three sovereign credit-rating upgrades since April 2025, enabling the country to return to international capital markets after a hiatus of around four years. He further said the latest USD 3 billion transaction received orders equivalent to twice the amount issued, with participation from investors in Asia, the Middle East, Europe and the United States. “This is a great vote of confidence in terms of our direction of travel as far as the economy is concerned, ” he said. Looking ahead, Aurangzeb said the government was targeting economic growth of above four percent during the current fiscal year and aimed to increase foreign exchange reserves from USD 18. 4 billion as of June 30 to USD 21 billion by the end of the fiscal year. He said the government was closely monitoring the ongoing US-Iran conflict and its potential implications for growth and inflation projections. On private capital mobilisation, the minister called for greater participation of domestic investors and conglomerates in privatisation transactions, saying their involvement would send a strong signal to foreign investors. He also welcomed efforts to bring PPP and privatisation initiatives under one umbrella through the Privatisation Commission, saying successful provincial models, particularly in Sindh, could be replicated at the federal level. Aurangzeb stressed that mobilising private capital required a whole-of-government approach, with the government fully committed to privatisation, PPPs and measures aimed at attracting private equity and venture capital investment. Copyright Business Recorder, 2026

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