Pakistan’s Sukuk market transitions from growth to green in 2025

December 30, 2025 (MLN):  Pakistan marked a major milestone in Islamic finance in 2025 as the Ministry of Finance (MoF), through its Debt Management Office and in collaboration with Joint Financial Advisors, completed the largest Sukuk issuance ever recorded in a single year, exceeding Rs2 trillion.

This achievement, highlighted by Khurram Schehzad on his X handle, represents a historic breakthrough for the country’s Shariah-compliant financing framework.

During 2025, the government conducted 61 Sukuk issuances across 1-year, 3-year, 5-year, and 10-year tenors under both fixed and variable rate structures.

 Overall, Shariah-compliant issuance for the year reached Rs2.5tr, which reflects strong investor demand and expanding market depth.

A defining highlight of the year was the launch of Pakistan’s first-ever Green Sukuk, which attracted exceptional interest and was oversubscribed by 5.4 times.

The Sukuk was backed by cashflows linked to key public-sector entities, including Pakistan Railways, TDAP, NHA, CDA, PAA, PSB, and KPT, that signaled a new direction in sustainable and asset-backed Islamic financing.

Between 2019 and 2025, total Sukuk issuance climbed to Rs8.7tr, with outstanding Sukuk now standing at Rs6.6tr.

Total outstanding Shariah-compliant government instruments have reached Rs7.1tr, through the rapid structural development of Pakistan’s Islamic capital market.

The share of Shariah-compliant instruments in the government’s domestic debt portfolio rose significantly to around 14.5% by December 2025, up from 12.6% in June 2025.

This steady increase places the Ministry of Finance firmly on track to meet its target of raising the share of Islamic instruments to 20% by FY28.

Overall, this progress highlights growing investor confidence, improved sovereign debt management, and the government’s commitment to diversifying funding sources.

With a stabilizing macroeconomic environment and a clear strategy for Islamic finance, Pakistan is strengthening the foundations of a more resilient, inclusive, and future-oriented government securities market.

Copyright Mettis Link News