Pakistan to issue Panda Bonds to raise capital in China

• The federal government of Pakistan has resolved to start Panda Bonds to increase loans from Chinese money marketplaces. Launching of Panda Bonds is an element of Pakistan’s programs to move towards giving the Chinese forex, a standing at par with that appreciated by the US dollar. The curiosity costs and the size of the bonds would be determined at a later on stage.

• The Finance Ministry of Pakistan has reported that the Panda Bonds are the section of its multipronged approach for bridging the overseas funding requirements and developing foreign trade reserves. Panda Bonds will help Pakistan to diversify the trader base of capital industry issuance and present a source of increasing renminbi.

• China is Pakistan’s greatest buying and selling partner. Pakistan has the maximum trade deficit with China. The increasing of funds in Chinese forex will support Pakistan to bridge the deficit.

Panda Bonds

• Panda bonds are Chinese renminbi-denominated bonds from a non-Chinese issuer, sold in the People’s Republic of China. The initial two Panda bonds were issued in October 2005 on the by the International Finance Corporation and the Asian Progress Financial institution on the identical working day.

• The Philippines issued its inaugural Panda bonds in 2018. It was the 1st ASEAN member to problem Panda bonds.

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Mains Paper 3: Economy

Prelims level: Panda Bonds

Mains level: Details about Panda Bonds and impact on Chinese economy

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