Pakistan Takes a Giant Leap towards Economic Revival
Diversifying Funding Base with Yuan-Denominated Bonds
Pakistan is set to issue yuan-denominated “panda bonds” as early as June, marking a significant step towards integrating its capital markets with China’s. This move will not only help Beijing expand the use of the yuan but also provide Pakistan with a much-needed boost to its debt-laden economy.
Finance Minister’s Vision for Economic Transformation
In an exclusive interview, Finance Minister Muhammad Aurangzeb emphasized the importance of diversifying Pakistan’s funding base, aiming to raise $200 million to $250 million from Chinese investors. He believes this is crucial for the nation’s economic growth and stability.
Learning from Egypt’s Success
Pakistan is following Egypt’s lead in issuing yuan bonds, leveraging credit improvement from the Beijing-led Asian Infrastructure Investment Bank (AIIB). Last year, Egypt received guarantees from the AIIB and the African Development Bank, covering principal and interest, to issue panda bonds on the local mainland China market.
Boosting Cooperation with China
Aurangzeb expressed his commitment to supporting the “internationalisation of the renminbi” and enhancing cooperation with China’s capital markets. He also highlighted the significance of the China-Pakistan Economic Corridor (CPEC) in transforming Pakistan’s economy through an export-led model.
CPEC 2.0: A Game-Changer for Pakistan’s Economy
The second phase of the CPEC project aims to set up special economic zones in partnership with China, reforming Pakistan’s agricultural and information technology sectors while attracting Chinese companies to relocate their low-end industries to the country. Aurangzeb believes this will help Pakistan digest its debt and achieve sustainable economic growth.
Security Pledges for Chinese Companies
Aurangzeb also vowed to step up security in Pakistan to protect Chinese companies, following a series of deadly attacks in the region. This move is critical for fostering a conducive business environment and promoting bilateral trade and investment.
A New Era of Economic Cooperation
Pakistan’s decision to issue yuan-denominated bonds and enhance cooperation with China marks a significant shift towards economic revival. As the country navigates its way out of economic turmoil, this strategic move is expected to yield positive results and strengthen its position in the global economy.
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