KARACHI: Finance Minister Muhammad Aurangzeb on Tuesday announced that Pakistan has formally initiated the process of raising fresh financing from international capital markets through the issuance of Eurobonds, Sukuk and, for the first time, dollar-settled rupee-linked bonds as part of a broader strategy to diversify funding sources and improve the country’s debt profile.
Speaking at the Pakistan Banking Summit 2026 (PBS’26) in Karachi, the finance minister said the Ministry of Finance had issued Requests for Proposals (RFPs) to global investment banks, financial institutions and other market participants, inviting bids for structuring the planned bond issues, including proposed pricing and expected subscription volumes.
The RFP process will pave the way for appointing financial advisers, lead managers and underwriting consortia to manage Pakistan’s upcoming international bond transactions.
“We have just issued RFPs for Sukuk bonds, Eurobonds and, for the first time, dollar-settled rupee-linked bonds because we want to return to the international capital markets and extend the maturity profile of our external debt,” Aurangzeb said.
He clarified that the planned bond issuances were primarily intended to refinance existing liabilities rather than add significantly to the country’s overall debt burden.
“Many of these instruments will replace existing debt instead of creating additional liabilities. Refinancing earlier obligations will remain an important part of our debt management strategy,” he added.
Aurangzeb noted that Pakistan had successfully re-entered international capital markets after a four-year absence through a Eurobond issue in April 2026. Strong investor demand enabled the government to exercise the greenshoe option, increasing the issue size to $750 million.
He added that Pakistan followed this success with its inaugural $250 million Panda Bond in May 2026, which attracted subscriptions five times the offered amount while securing the country’s lowest-ever borrowing cost for a three-year international bond.
SME Finance Task Force Announced
The finance minister also announced the formation of a high-level SME Finance Task Force aimed at improving access to credit for small and medium-sized enterprises (SMEs), which he described as the backbone of Pakistan’s economy.
He acknowledged that SMEs continue to face serious financing constraints despite their vital contribution to economic growth.
“We welcome large businesses, but SMEs must also receive their fair share of financing. Access to credit cannot remain limited to only a few banks. It has to become an industry-wide commitment,” he said.
The task force will be led by the State Bank of Pakistan (SBP) and will include senior representatives from the Pakistan Banks’ Association (PBA), Small and Medium Enterprises Development Authority (SMEDA), chambers of commerce and industry, and the Ministry of Finance. It will recommend practical measures to expand SME financing across the banking sector.
Aurangzeb said the government would continue expanding partial credit guarantee schemes, particularly for SMEs and small farmers, while providing subsidised financing where necessary, especially for export-oriented industries.
Reducing Reliance on Bank Borrowing
The finance minister said the government was introducing new financing instruments to reduce dependence on borrowing from domestic banks, a practice that has long been criticised for limiting credit available to the private sector.
As part of these reforms, he highlighted the State Bank’s newly launched digital investment platform, InvestPak, which allows individuals and corporate investors to directly purchase government securities, including treasury bills.
Medium-Term Tax Strategy and AI-Based Tax Administration
Aurangzeb also announced that the government would soon unveil a medium-term tax strategy to provide businesses with greater policy certainty.
He said the Tax Policy Office was preparing a four-to-five-year tax framework in consultation with the business community and other stakeholders to encourage long-term investment decisions.
“Businesses need a predictable tax environment to plan their investments. The new strategy will provide greater clarity on future tax policy,” he said.
The finance minister further revealed that Parliament had approved a new tax administration operating model aimed at reducing human interaction between taxpayers and tax officials.
Under the new system, many powers currently concentrated in income tax officers—including assessments, notices, recovery and enforcement—will be automated through technology-driven processes.
“The future tax administration will be AI-led and technology-driven, making use of large language models (LLMs), machine learning and advanced algorithms to improve transparency and minimise discretionary intervention,” Aurangzeb said.
