Pakistan hints at more panda bonds, samurai bond debut

October 13, 2026 (MLN): Pakistan plans to keep broadening its funding sources, with the government signalling it may come back to China’s panda bond market and could also tap Japan’s samurai bond market.

The government does not want to raise the overall size of its external debt, and the recent panda bond will not be a one-off, as Islamabad intends to return as a repeat issuer.

Finance Minister Muhammad Aurangzeb made these remarks in an interview with Nikkei Asia on Monday, on the sidelines of the IMF and World Bank annual meetings, which began the same day in Bangkok, according to the Ministry of Finance.

He described China as the second largest and deepest capital market in the world, and said samurai bonds would make sense but needed more homework and careful thought before any decision.

Pakistan sold its debut panda bond in mid-May, raising 1.75bn yuan ($261mn) under a 7.2bn yuan programme that carries partial guarantees from the Asian Development Bank and the Asian Infrastructure Investment Bank.

A panda bond is a yuan-denominated debt instrument sold by a foreign borrower in China’s domestic market.

Emerging economies, including Indonesia, have also turned to this market to widen their investor base.

Data from S&P Global shows panda issuance reached about 160bn yuan ($23.8bn) in the first half of 2026, up 68% from a year earlier, while foreign issuers now account for 50% of the market against 39% last year.

On investment, Senator Aurangzeb said the government is working to attract more foreign direct investment by making key industries, including autos, more competitive.

He said there would be no compromise on the five-year National Tariff Policy (NTP), launched last year, which gradually lowers import duties in key sectors, and that it applies to industry as a whole and not only to autos.

He said past protection without sunset clauses had failed the country, and that the NTP could lift exports, especially of raw materials and intermediate goods. Citing ASEAN’s tariff cuts in the late 1990s, he said Pakistan could have its own Southeast Asia moment.

Separately, Pakistan is seeking cabinet approval for a revised auto policy that backs electric vehicle adoption, with a target of 30% of new vehicles being electric by 2030.

The policy’s strict export targets for carmakers have drawn criticism, with some observers saying they favour Chinese new energy vehicle makers.

Senator Aurangzeb said Pakistan welcomes all Chinese automakers.

BYD has already begun local assembly. China is Pakistan’s largest bilateral lender, and the two countries marked 75 years of diplomatic ties in May.

On the IMF, Senator Aurangzeb said the country is in good shape under its current programme, which helps in dealings with rating agencies and investors, and that its structural reform agenda will lead to sustainability.

Pakistan is in its 25th IMF arrangement and owed the Fund about $10.5bn as of Monday.

He said the country would exit IMF assistance once the world is convinced it no longer needs a lender of last resort.

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