https://arab.news/2g9np
- The development comes as Pakistan navigates a tricky path to economic stability under a $7 billion IMF program since averting a default in 2023
- Finance Minister Muhammad Aurangzeb mentions climate change and population growth as real threats to the $411 billion South Asian economy
ISLAMABAD: Pakistan expects its remittance inflows to rise to $43 billion this fiscal year as it plans to launch the first Panda bond, the country’s finance minister Muhammad Aurangzeb said on Thursday, amid improving macroeconomic indicators.
The development comes as Pakistan navigates a tricky path to economic stability under a $7 billion International Monetary Fund (IMF) program since averting a default in 2023.
Last year, the country’s remittance inflows increased to $38 billion in 2024, compared to $27 billion in 2023, amid efforts to formalize over $400 billion economy by curbing currency smuggling and widening tax base.
“We expect in this fiscal year the remittances to go up to about anywhere between $41-43 billion and that’s a direct function of this macroeconomic stability and a stable currency rate,” Aurangzeb said at a business summit in Peshawar.
The minister shared that Islamabad made a $500 million repayment for Euro bond, while the country is “well positioned” for its next payment of $1.3 billion in April.
“So now we have to go back into the international capital markets, and so God willing, before the year [2025] is out, we expect we’ll have the inaugural Panda bond issued,” he said.
A panda bond is a Chinese yuan-denominated debt instrument issued in China’s onshore bond market by foreign governments, multilateral institutions or companies. It allows overseas borrowers to access China’s vast pool of investors while diversifying funding sources.
“All these positive outcomes of economic stability, this is how it translates into getting the economy moving forward,” Aurangzeb said.
FLOOD RISKS
While he described the country’s economy to be “very resilient,” he mentioned climate change and population growth as threats to the $411 billion economy, which the World Bank says can be around $3 trillion by 2047 given its true potential is realized.
“If [we] are to realize that potential, then we have two existential issues: one [is] dealing with climate change and the other is population,” he said. “Unless we negotiate these challenges, we are not going to get there.”
Aurangzeb’s comments follow deadly floods in Pakistan that have killed 1,006 people since late June and affected millions of others, with the government assessing damages. The latest disaster struck only three years after deluges killed over 1,700 Pakistanis, affected another 33 million and caused around 30 billion in economic losses.
“Climate change is not something which is academic. It is not only adaptation. We are living it day in and day out,” he said.
“So right now, we do not have this room for an economic recovery first that we fix our economic woes and then we start addressing these issues. These have real implications for our people, for livelihoods, for our economy as we go forward.”
Sensing this urgency, the minister said, the government plans to kick in a 300-day plan to mitigate the climate crisis.
“That’s where we are working as whole of the government. We are going to help support assessments to climate change any way we can,” he said.
Similarly, Aurangzeb said, Pakistan’s annual population growth of 2.5 percent leads to issues such as poverty, malnutrition and out-of-school children.
“We are very focused on what we have to do in short to medium terms... we have to get, in terms of a direction for the country, to also negotiate these two existential issues as we go forward,” he added.