Government Plans First Dollar-Settled Rupee-Linked Bonds

Pakistan plans to return to international debt markets by issuing new Eurobonds, Sukuk, and its first-ever dollar-settled, rupee-linked bonds as part of a strategy to extend the maturity profile of its external debt, Finance Minister Muhammad Aurangzeb announced on Tuesday.

 

The country re-entered global capital markets in April 2026 after a four-year gap by successfully issuing a $750 million Eurobond. Strong investor demand allowed the government to exercise the greenshoe option, increasing the original issue size. In May 2026, Pakistan also launched its inaugural $250 million Panda bond, which attracted subscriptions five times the offered amount and secured the country's lowest-ever borrowing cost for a three-year bond.

 

Speaking at the Pakistan Banking Summit 2026, Aurangzeb revealed that the government has issued Requests for Proposals (RFPs) for new Sukuk, Eurobonds, and the country's first dollar-settled, rupee-linked bonds. He explained that these instruments are intended to help Pakistan re-engage with international capital markets while extending the repayment schedule of its external obligations.

 

The finance minister emphasized that the planned issuances are primarily aimed at refinancing existing liabilities rather than increasing the country's overall debt burden. According to him, replacing older debt with new instruments will remain a key component of the government's debt management strategy.

 

Reviewing Pakistan's economic performance, Aurangzeb said the country concluded the last fiscal year with strong macroeconomic indicators, including a primary fiscal surplus, the lowest fiscal deficit on record, and a debt-to-GDP ratio below 70%. He added that the economy expanded by 3.7%, supported by a strong recovery in large-scale manufacturing.

 

He also highlighted the continued strength of Pakistan's external sector, noting that record remittance inflows are expected to reach between $41 billion and $42 billion during the current fiscal year. While overall exports declined, he clarified that the slowdown was largely driven by food exports, whereas value-added sectors, particularly textiles, continued to post year-on-year growth.

 

To improve financing access for small and medium-sized enterprises (SMEs), Aurangzeb announced the formation of a dedicated task force led by the State Bank of Pakistan (SBP). The initiative will include representatives from the Pakistan Banks' Association (PBA), the Small and Medium Enterprises Development Authority (SMEDA), chambers of commerce and industry, and the Ministry of Finance.

 

During the summit, Pakistan Banks' Association Chairman Zafar Masud highlighted the banking sector's progress in expanding financing to priority sectors, accelerating digital transformation, and promoting financial inclusion. He stressed that continued collaboration between banks, regulators, and policymakers will be essential for building a resilient and inclusive financial system that supports long-term economic growth.

 

Minister of State for Finance and Railways Bilal Azhar Kayani also outlined the government's vision for a cashless economy, emphasizing digital payments, technological innovation, and stronger public-private partnerships to enhance financial inclusion, improve economic documentation, and support sustainable growth.

 

Meanwhile, SBP Deputy Governor Saleem Ullah reaffirmed the central bank's commitment to expanding access to finance for SMEs and strengthening their contribution to Pakistan's inclusive and sustainable economic development.