Aurangzeb orders swift launch of skills bond, farmers scheme, and fan replacement programme
The minister gave these directives while chairing meetings to review the progress of work on major government initiatives on Friday.
'The initiatives, each designed to generate measurable social impact and advance national development objectives, are being implemented in close coordination with relevant ministries, regulatory bodies, financial institutions, and technical partners,' read a statement released by the Finance Division.
As per the statement, the first meeting reviewed the Pakistan Skills Impact Bond (PSIB), the country's first outcomes-based, impact-linked financing instrument to be raised domestically.
Developed under the Social Impact Financing Framework created by a Ministry of Finance-led committee constituted by the Prime Minister, this instrument will serve as the first in a broader programme to mobilise funding from both domestic and international private and philanthropic capital.
All social impact financing will be tied to one or more of the six priority pillars outlined in the Framework and linked to several Sustainable Development Goals (SDGs).
The finance minister observed that the PSIB must be positioned as a 'trailblazer' that not only meets immediate development needs but also sets a precedent for attracting a more diverse and deeper investor base.
The second meeting focused on the National Subsistence Farmers Support Scheme (NSFSS), a flagship component of the ECC-approved Access to Finance framework for farmers.
The government believes that the NSFSS will unlock digitally enabled, uncollateralized bank loans for smallholder farmers—those owning or cultivating up to 12.5 acres of land, including tenant farmers.
'By leveraging agronomy-related satellite data through the Land Information and Management System (LIMS), banks will integrate this data into their credit scoring models, enabling the provision of loans for agricultural inputs at reasonable mark-up rates, in contrast to the high costs associated with informal lending from middlemen,' read the statement.
It was reported that the State Bank of Pakistan is collaborating with banks and the Pakistan Banks' Association to operationalise the scheme via a centralised portal developed and managed by the Punjab Information Technology Board (PITB), ensuring an end-to-end digital customer journey.
The finance minister noted that this would be 'the first time space technology will be driving agricultural credit decisions on a national scale' and that the initiative represented 'a breakthrough moment' for rural financing in Pakistan.
He also pointed out that with 97% of farmers owning less than 12.5 acres as per the latest 7th Agriculture Census, the scheme was directly targeted at the segment most in need of affordable credit, and it would have a transformative impact on rural livelihoods, agricultural productivity, and financial inclusion.
Meanwhile, the third meeting reviewed progress on the Prime Minister's Fan Replacement Programme, an energy efficiency initiative co-developed by the Power Division's National Energy Efficiency and Conservation Authority (NEECA) in collaboration with banks.
The programme will enable consumers to replace existing ceiling fans with energy-efficient models at affordable financing rates, with the Ministry of Finance providing a nominal first-loss guarantee to incentivise bank participation.
An online portal, also developed by PITB, will facilitate a fully digital process—from customer onboarding to loan application, fan selection from approved local manufacturers, and loan disbursement and repayment.
Multiple domestic manufacturers of energy-efficient fans have been onboarded and will expand production capacity to meet anticipated demand, contributing to job creation and SME growth.
The Finance Minister emphasised that this initiative was 'about more than just replacing fans—it is about embedding energy efficiency into household choices, reducing the national energy footprint, and opening new lending opportunities for SMEs.'
He underscored that linking such projects to SDGs and exploring additional sources of financing would amplify their social and economic impact while helping create sustainable local manufacturing capacity.
Concluding the series of meetings, Aurangzeb observed that each project carried the potential to serve as a model for scale-up, both in Pakistan and internationally, and that delivering them effectively would 'signal that Pakistan is ready to innovate, ready to partner, and ready to deliver results that matter for its people.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
15 hours ago
- Business Recorder
Public utility cos: Finance ministry seeks update on Raast QR code printing
ISLAMABAD: The Ministry of Finance has sought update on implementation of printing of Raast QR code in public utility companies which has been launched by the State Bank of Pakistan (SBP). In a letter addressed to the administrative ministries of regulatory bodies and their respective chairpersons, the Ministry emphasized that this initiative aligns with the Prime Minister's vision to accelerate the digitalization of payments across the country. As part of the broader push to enhance ease of payments, improve transparency, and boost operational efficiency, all relevant ministries, departments, and regulatory bodies have been instructed to begin the process of enabling Raast QR codes on all utility bills under their jurisdiction. Digital payments: Utility bills to have QR codes The Raast Instant Payment System —developed and operated by the SBP and supported by Karandaaz — offers a secure, real-time, and cost-effective platform for Person-to-Government (P2G) and Person-to-Business (P2B) transactions. A key feature of the system is the dynamic QR code functionality, which allows customers to conveniently make payments by scanning a QR code through their bank's mobile application. This initiative is expected to: (i) improve convenience for payers through interoperable and instant digital payment options; (ii) reduce cash handling and the associated reconciliation burden for utility service providers; and (iii) enhance transparency and traceability of government receipts. In this regard , all utility service providers operating under the Cabinet Division, Power Division, Petroleum Division, Telecommunication and Telecom Division and Interior Division (including but not limited to electricity, gas and telecom) have been advised to: (i) coordinate with their respective banks to integrate dynamic Raast QR code generation within their billing systems; (ii) ensure that Raast QR codes are printed or digitally displayed on all utility bills issued to consumers; and (iii) share implementation timelines and periodic progress updates with the Ministry of Finance and the State Bank of Pakistan's Digital Innovation& Settlement Department (DISD), which is the custodian of Raast. The Raast teams at the SBP and Karandaaz will jointly support this initiative and are available to provide technical advisory to all utility companies and ministries. Karandaaz in collaboration with SBP will organize a webinar to address any queries that relevant departments may have regarding integration with financial institutions for receiving payments through Raast's dynamic QR. According to the Concept Note of Finance Ministry, utility bill payments in Pakistan currently operate through a reference number-based mechanism. Consumers use this reference number to fetch their due amounts via banking apps or over-the-counter agents and complete payments manually. While this model is functional, it lacks seamlessness and user-friendliness, and involves operational inefficiencies for both consumers and billers. To modernize this process and align with the Government of Pakistan's cashless agenda, the Raast Instant Payment System offers an advanced solution using Dynamic QR codes. This initiative is being spearheaded by the Ministry of Finance in collaboration with the SBP. Utility companies operate internal billing servers which generate consumer bills using a unique reference number, calculating two payable amounts (before and after the due date).Bills are dispatched physically and made available through digital banking channels for consumer convenience. Consumers use their bank's mobile app or internet banking to input the reference number, fetch due amounts, and complete payments. Real-time integration with banks or aggregators marks the bill as paid and reconciles the transaction. Two functionalities under Raast are particularly relevant: (i) Raast Person-to-Merchant (P2M) with Dynamic QR:A QR code is generated with the bill amount and recipient (utility company) details embedded. No manual input is required; upon scanning, payment is instantly processed and reconciled; and (ii) Raast Request to Pay (RTP): Enables real-time payment initiation by the utility company. While useful in other contexts, for physical or print-based bills, Dynamic QR is more appropriate. The proposed integration for Utility Bill Payments via Dynamic QR are as follows: (i) at bill generation, utility companies will also generate a Raast Dynamic QR, embedding consumer-specific amount and company IBAN; (ii) this QR code will be printed on the physical bill or displayed on the digital version; (iii) customers can scan this QR using any Raast-enabled banking app, confirm payment, and instantly complete the transaction; and (iv) payment will be debited from the customer's account and credited to the utility provider's account, with real-time reconciliation. The expiry date of the QR can be aligned with the bill due date (custom expiry support maybe required from participating banks and Raast). Finance Ministry further stated that each utility company may engage its respective bank to provide Raast Dynamic QR services. The integration will require technical development to generate dynamic QRs during bill creation. The SBP's Digital Innovation and Settlement Department (DISD), can be contacted for technical advisory for smooth implementation. It will simplify payment experience for consumers (scan-to-pay from any bank app) and eliminate manual errors and late payment friction. It will reduce cash handling, streamlines reconciliation, and improves operational efficiency, besides enhances transparency, traceability, and digital audit trail for government and utility providers. Ministries and regulatory bodies have been requested to direct all utility service providers under their remit to initiate engagement with their banking partners for Dynamic QR integration. Implementation timelines may vary based on technical readiness, but this transformation is a key enabler of Pakistan's cashless strategy. Copyright Business Recorder, 2025
Business Recorder
16 hours ago
- Business Recorder
Exchange rate volatility: Pakistan govt plans to minimise risks with hedging
ISLAMABAD: The government has planned to use hedging instruments to mitigate exchange rate volatility risks, besides efforts are under way to develop domestic futures and interest rate swap markets. This has been revealed in the 'Medium Term Debt Management Strategy (MTDS) fiscal year 2026-28,' released by the Debt Management Office, Finance Division. Nominal GDP is projected to increase from Rs114.7 trillion in fiscal year 2025 to Rs162.5 trillion by fiscal year 2028, reflecting an expected broad-based economic recovery. Commodity producing sectors are expected to expand, driven by agriculture and manufacturing. Pakistan achieves early retirement of Rs1.5trn public debt in FY25 Fiscal consolidation is expected to result in an average primary surplus of around one per cent of GDP during the strategy period, in line with the International Monetary Fund (IMF) programme targets. The strategy noted that the government is committed to actively manage foreign exchange (FX) risk. Innovative instruments, such as debt-for-nature swaps, are also being explored to manage external debt while reducing associated risks, it added. MTDS noted that total public debt as of end-fiscal year 2025 is estimated at Rs78.2 trillion (USD 275.9 billion), equivalent to around 68 per cent of estimated GDP. Over the past years, financing has increasingly been obtained from domestic sources. Consequently, the share of domestic debt increased from around 62 per cent of total public debt in fiscal year 2023 to around 68 per cent of total public debt in fiscal year 2025. Cost of debt in fiscal year 2025 remains elevated, particularly for domestic borrowing. The overall weighted average interest rate stands at 11.9 per cent, driven largely by the significantly higher cost of domestic debt relative to external sources. While external debt carries a much lower weighted average interest rate of 4.4 per cent, reflecting the high shares of concessional and semi-concessional financing, domestic debt bears a substantially higher average rate of 15.82 per cent, underscoring the high cost of domestic financing. As a result, interest payments have consumed nearly sixper cent of GDP in fiscal year 2025. Refinancing risk has declined as the Average Time to Maturity (ATM) of domestic debt improved from 2.7 years in June 2024 to 3.8 years in June 2025. The ATM for external debt remains over 6.1 years, resulting in an overall ATM of approximately 4.5 years. Interest rate risk is high for domestic debt, reflecting a shift to floating rate domestic debt instruments due to market demand over the past years, primarily due to a growing reliance on floating-rate instruments in response to market preferences. This trend was particularly evident in fiscal year 2023, when investors showed a strong preference for short- to medium-term floating-rate Pakistan Investment Bonds (PIBs), notably the 5-year tenor with semi-annual coupons. This shift was driven by expectations of continued interest rate hikes and a high policy rate environment, which peaked at 22 per cent during fiscal year 2023. Nearly 80 per cent of domestic debt is subject to an interest rate refixing in fiscal year 2026, with an average time to refixing (ATR) of only 1.2 years. ATR for external debt is higher at 4.5 per cent, reflecting a higher share of fixed rate debt. Foreign currency risk remains manageable regarding the share of foreign currency denominated debt in total public debt, which is expected to be moderate 32 per cent as of end-fiscal year 2025. The share of short-term external debt relative to reserves, however, remains high, reflecting both increased short-term external borrowing and the low level of reserves. Although, recent efforts have transpired into extending the maturity profile and contain currency risk, the MTDS fiscal year 2026-28 further shifts toward rebalancing the debt portfolio by increasing reliance on longer-term, fixed-rate domestic instruments and reducing exposure to short-term, high-cost borrowing. To achieve these goals, the efforts will be made to expand net issuances of fixed-rate Pakistan Investment Bonds (PIBs), including newly introduced zero-coupon bonds in both conventional and sharia markets, which have been designed to attract long-term institutional investors. Floating-rate issuance will be limited to longer tenor, while the share of Treasury Bills (T-bills) will be limited to avoid further short-term debt accumulation. A significant emphasis is also placed on deepening the domestic capital market through a targeted increase in Sharia-compliant instruments, aiming to exceed 20 per cent of total domestic securities. Copyright Business Recorder, 2025
Express Tribune
16 hours ago
- Express Tribune
Reserves edge up, rupee gains for 4th week
Pakistan's foreign exchange reserves recorded a slight improvement during the week ended August 8, 2025, with the State Bank of Pakistan (SBP) holdings rising $11 million to $14.243 billion. According to data released by the central bank, the country's total liquid foreign reserves stood at $19.497 billion. Of this, commercial banks held net reserves of $5.254 billion, while the SBP accounted for the remaining $14.243 billion. Moreover, on Friday, the SBP injected around Rs12 trillion into the banking system through a reverse repo auction. The market operation included Rs191 billion for seven-day tenors at 11.04% and Rs11.812 trillion for 14-day tenors at 11.01%. The Pakistani rupee extended its upward momentum, marking its fourth consecutive week of gains against the US dollar. According to Ismail Iqbal Securities, the local currency appreciated 0.06% day-on-day to close at 282.06 against the greenback. On a calendar-year-to-date basis, however, the rupee has depreciated 1.25%, while in the current fiscal year to date, it has gained 0.60%. AKD Securities noted that the rupee gained for the fourth consecutive week against the US dollar. Meanwhile, gold prices in Pakistan fell, tracking global trends, where the yellow metal edged higher but remained on course for a weekly loss as hotter-than-expected US inflation data dampened prospects of near-term interest rate cuts. Market attention has shifted to the much-anticipated meeting between US President Donald Trump and Russian President Vladimir Putin. In the local market, the price of gold per tola dropped Rs1,000 to Rs357,100, according to the All Pakistan Sarafa Gems and Jewellers Association. The price of 10-gram gold also declined, settling at Rs306,155, after a decrease of Rs858. Earlier in the week, on Wednesday, gold had slipped by Rs200 per tola to Rs358,100. Interactive Commodities Director Adnan Agar noted that the gold market has seen limited movement, with prices fluctuating within a narrow range of about $10 to $15. "The market is relatively stable because of the Russia-US summit. Any significant shift will likely be seen on Monday once the outcome of talks becomes clear," he said. Spot gold rose 0.2% to $3,342.62 per ounce by 11:16 am EDT (1516 GMT), but was down 1.7% for the week, according to Reuters.
