Latest news with #Sukuks
Business Recorder
21-05-2025
- Business
- Business Recorder
Pakistan economy moving in the right direction: SBP governor
KARACHI: Governor of the State Bank of Pakistan, Jameel Ahmad Tuesday said after facing significant economic challenges in recent years, Pakistan's economy is now moving in the right direction with support of the corrective actions that have led to substantial improvements. Speaking at the 3rd National Islamic Economic Conference 2025 organized by Saylani Welfare International Trust in collaboration with the National Islamic Economic Forum (NIEF) and Darul Uloom Memon titled 'Towards the Islamic Digital Economy,' Governor SBP, delivered a comprehensive overview of the country's economic progress, the expansion of Islamic banking, and the role of digitalization and the IT sector in national development. Speaking the conference, he also underlined the importance of launching Sukuk to support Islamic finance and highlighted the steps taken to equip the banking workforce with Shariah-compliant training and frameworks. Macroeconomic outlook: SBP governor apprises foreign investors He advocated for simplifying the issuance of Sukuk bonds to further Islamic financial growth and outlined government-SBP efforts to deepen Pakistan's Sukuk market and urged stakeholders to tackle issuance bottlenecks. The SBP is actively working to simplify the Sukuk structure and streamline the process for issuing new Sukuks, Governor said and added that the SBP and the government are jointly pursuing the transition of public debt towards Sukuk- a Shariah-compliant financial instrument. 'We need to collectively address the underlying challenges to enable the issuance of more Sukuks and offer investors financial products that align with Shariah principles,' he emphasized. The Governor SBP highlighted that decisive policy actions taken by the government and the central bank have led to marked improvements including a sharp decline in inflation, a strengthened current account balance, and growing foreign exchange reserve He noted that three years ago, Pakistan grappled with surging inflation and external account imbalances. Through coordinated efforts by the government and the central bank, these issues were addressed effectively. He highlighted that inflation dropped to just 0.3 percent in April 2025, the lowest in over half a century, while the interest rate has decreased from 22 percent to 11 percent. He added that the inflation rate is expected to remain between 5-7 percent by the end of FY25. In addition, the trade deficit was reached highest ever level and now has been controlled. Since 2022, Pakistan has repaid $100 billion in foreign debt. Foreign exchange reserves have increased from $3 billion to $11 billion, and inflows of home remittances from $30 billion to $38 billion annually, thanks largely to freelancers and overseas workers. He praised the State Bank's initiatives in Islamic banking, revealing that Pakistan was recognized as the best central bank for Islamic banking efforts by a Malaysian institution. He added that one-fourth of banking deposits in Pakistan are now invested in compliance with Islamic principles. The governor also discussed the government's 2022 steering committee for Islamic banking transformation, which has held 450 meetings over the past 2.5 years. The State Bank has provided banks with guidance to address challenges, such as ensuring parity in profits between Islamic and conventional banking systems. 'Islamic banking awareness is vital as some remain skeptical and Sylani Welfare's role in economic service and forex earning is commendable', he said. He stressed the importance of transitioning from conventional to Islamic banking and acknowledged improvements in various industries including textiles and cement. The trade balance has turned into a surplus, and forex stability is yielding positive impacts. Jameel said the number of Islamic banking branches has surpassed 8,000. Banks need to develop new products, and a legal framework for Islamic banking has been established. Banks have been instructed to match the profit returns of Islamic banking customers to those of conventional banks. The governor lauded Saylani Welfare Trust for empowering youth through the IT sector, stating that IT and freelancing have become major sources of foreign exchange. He shared that due to the contributions of freelancers and overseas workers, remittances are expected to reach $38 billion by end of this fiscal year. The Governor SBP emphasized the remarkable progress in Islamic banking and informed that as of March 2025, Islamic banking assets had grown to Rs. 11,300 billion, with deposits totaling Rs. 8,400 billion. Over 8,000 Islamic banking branches are now operational across the country. The State Bank has implemented a Shariah Governance Framework and adopted international standards, especially those by AAOIFI, to guide the sector's development, he said. He revealed that 25 percent of the total banking assets are now Shariah-compliant, and Pakistan has received international recognition for its efforts in Islamic finance. However, he stressed the need to address public misconceptions and to overcome barriers like the absence of sukuk issuance. The governor also spoke about the success of the Raast system, which enables real-time fund transfers in just 6 seconds. In 2015, only 16 percent of Pakistan's adult population had access to banking services. This figure has now risen to 64 percent, and the central bank aims to increase it to 75 percent by 2028 under the National Financial Inclusion Strategy. He encouraged banks to provide more credit to SMEs, agriculture, and housing sectors, while also expanding Shariah-compliant products and services. Copyright Business Recorder, 2025
Business Recorder
21-05-2025
- Business
- Business Recorder
Economy moving in the right direction: SBP governor
KARACHI: Governor of the State Bank of Pakistan, Jameel Ahmad Tuesday said after facing significant economic challenges in recent years, Pakistan's economy is now moving in the right direction with support of the corrective actions that have led to substantial improvements. Speaking at the 3rd National Islamic Economic Conference 2025 organized by Saylani Welfare International Trust in collaboration with the National Islamic Economic Forum (NIEF) and Darul Uloom Memon titled 'Towards the Islamic Digital Economy,' Governor SBP, delivered a comprehensive overview of the country's economic progress, the expansion of Islamic banking, and the role of digitalization and the IT sector in national development. Speaking the conference, he also underlined the importance of launching Sukuk to support Islamic finance and highlighted the steps taken to equip the banking workforce with Shariah-compliant training and frameworks. Macroeconomic outlook: SBP governor apprises foreign investors He advocated for simplifying the issuance of Sukuk bonds to further Islamic financial growth and outlined government-SBP efforts to deepen Pakistan's Sukuk market and urged stakeholders to tackle issuance bottlenecks. The SBP is actively working to simplify the Sukuk structure and streamline the process for issuing new Sukuks, Governor said and added that the SBP and the government are jointly pursuing the transition of public debt towards Sukuk- a Shariah-compliant financial instrument. 'We need to collectively address the underlying challenges to enable the issuance of more Sukuks and offer investors financial products that align with Shariah principles,' he emphasized. The Governor SBP highlighted that decisive policy actions taken by the government and the central bank have led to marked improvements including a sharp decline in inflation, a strengthened current account balance, and growing foreign exchange reserve He noted that three years ago, Pakistan grappled with surging inflation and external account imbalances. Through coordinated efforts by the government and the central bank, these issues were addressed effectively. He highlighted that inflation dropped to just 0.3 percent in April 2025, the lowest in over half a century, while the interest rate has decreased from 22 percent to 11 percent. He added that the inflation rate is expected to remain between 5-7 percent by the end of FY25. In addition, the trade deficit was reached highest ever level and now has been controlled. Since 2022, Pakistan has repaid $100 billion in foreign debt. Foreign exchange reserves have increased from $3 billion to $11 billion, and inflows of home remittances from $30 billion to $38 billion annually, thanks largely to freelancers and overseas workers. He praised the State Bank's initiatives in Islamic banking, revealing that Pakistan was recognized as the best central bank for Islamic banking efforts by a Malaysian institution. He added that one-fourth of banking deposits in Pakistan are now invested in compliance with Islamic principles. The governor also discussed the government's 2022 steering committee for Islamic banking transformation, which has held 450 meetings over the past 2.5 years. The State Bank has provided banks with guidance to address challenges, such as ensuring parity in profits between Islamic and conventional banking systems. 'Islamic banking awareness is vital as some remain skeptical and Sylani Welfare's role in economic service and forex earning is commendable', he said. He stressed the importance of transitioning from conventional to Islamic banking and acknowledged improvements in various industries including textiles and cement. The trade balance has turned into a surplus, and forex stability is yielding positive impacts. Jameel said the number of Islamic banking branches has surpassed 8,000. Banks need to develop new products, and a legal framework for Islamic banking has been established. Banks have been instructed to match the profit returns of Islamic banking customers to those of conventional banks. The governor lauded Saylani Welfare Trust for empowering youth through the IT sector, stating that IT and freelancing have become major sources of foreign exchange. He shared that due to the contributions of freelancers and overseas workers, remittances are expected to reach $38 billion by end of this fiscal year. The Governor SBP emphasized the remarkable progress in Islamic banking and informed that as of March 2025, Islamic banking assets had grown to Rs. 11,300 billion, with deposits totaling Rs. 8,400 billion. Over 8,000 Islamic banking branches are now operational across the country. The State Bank has implemented a Shariah Governance Framework and adopted international standards, especially those by AAOIFI, to guide the sector's development, he said. He revealed that 25 percent of the total banking assets are now Shariah-compliant, and Pakistan has received international recognition for its efforts in Islamic finance. However, he stressed the need to address public misconceptions and to overcome barriers like the absence of sukuk issuance. The governor also spoke about the success of the Raast system, which enables real-time fund transfers in just 6 seconds. In 2015, only 16 percent of Pakistan's adult population had access to banking services. This figure has now risen to 64 percent, and the central bank aims to increase it to 75 percent by 2028 under the National Financial Inclusion Strategy. He encouraged banks to provide more credit to SMEs, agriculture, and housing sectors, while also expanding Shariah-compliant products and services. Copyright Business Recorder, 2025
Business Recorder
20-05-2025
- Business
- Business Recorder
SBP Governor calls for Sukuk push
At the National Islamic Economic Forum 2025 in Karachi, State Bank of Pakistan (SBP) Governor Jameel Ahmad outlined government-SBP efforts to deepen Pakistan's Sukuk market and urged stakeholders to tackle issuance bottlenecks. 'We are working towards simplifying Sukuk structure and easing the process of issuing new Sukuks,' he said on Tuesday, adding that the central bank and the government are jointly working towards transferring public debt towards Sukuk, a Shariah-compliant bond. 'I think that we should address the underlying issues together, so that we can issue more Sukuks and provide products to investors that are compliant with the Shariah,' he said. Highlighting the country's macroeconomic indicators, the central bank chief shared that the SBP's foreign exchange reserves have increased from $3 billion in 2022 to over $11 billion, 'which has been achieved without taking loans.' Macroeconomic outlook: SBP governor apprises foreign investors During the same period, external debt declined by $1–1.5 billion, bringing total debt below $100 billion. 'Its positive impact on the economy will become evident in the coming days,' he said. Ahmad said that workers remittances, which last year stood at $30.3 billion, are expected to hit nearly $38 billion this fiscal year. 'This increase of approximately $8 billion is driven by the hard work of our overseas workers and the freelancing community.' Talking about Pakistan's Islamic banking industry, the central bank chief shared that by March 2025, the total assets of Islamic banking stood at Rs11.5 trillion, which accounts for 21.1% of the total banking assets. He added that the total deposits of Islamic banking in Pakistan stand at Rs8.8 trillion. 'Although much work needs to be done, we have made significant progress. The share of Islamic banking is gradually increasing,' said Ahmad. He urged the heads of Islamic banks to provide financial services in priority sectors, including SMEs, agriculture, housing and microenterprise. Moreover, Islamic Banking Institutions (IBIs) need to take several measures to enhance their outreach, he said. Digitisation of the economy The SBP Governor shared that a number of large-scale projects are operating to digitise the economy, including RAAST, a micro payment gateway. 'Through Raast, one can transfer funds from one part of the country to another in six seconds. This instant transfer of funds, which has accelerated our digitisation process,' he said. Ahmad shared that the number of digital transactions has increased from 5.5 billion to 7.5 billion in 2024, a growth of 38%. '87% of retail transactions are taking place in digital form,' he said.
Business Recorder
17-05-2025
- Business
- Business Recorder
Debt management, climate funding: Malaysia's ‘green finance model' being adopted: Aurangzeb
KARACHI: Federal Minister for Finance and Revenue, Muhammad Aurangzeb, Friday said Pakistan is adopting the Malaysian Green Finance Model to enhance its debt management strategy and address climate change financing needs. He made these remarks while addressing a gong ceremony organized by the Pakistan Stock Exchange (PSX) via video link from Karachi on Friday, marking the launch of the country's first-ever sovereign domestic green Sukuk. The finance minister highlighted that Pakistan stands to gain valuable insights from the Malaysian model and expressed confidence that the country can effectively move in that direction. He further told the participants that in overall debt profile of Pakistan, Sukuks have the share of around 14 percent. 'We are in the process of restructuring and reorganizing our debt management office in line with the global best practices and adopting modern lines' he added. He further said that 'What we will do is to continue to engage the investors to get their feedback on this and you will listen soon on these lines.' Talking on the Green Sukuk, Finance Minister said that Climate Change is the existential threat for Pakistan and the government is stressing on the need of financing for it along with acquiring IMF's $1.3 Billion Climate Resilience fund and with other concrete reform measures. He termed the launch of Green Sukuk Bond as a great achievement of Pakistan. Aurangzeb also mentioned his recent meetings in United States and UK and said that the messages coming from Multilateral, bilateral partners and investors is that they are surprised with the speed of recovery of country's economy showed in a short span of time. He further told the audience that structural reforms are under way in various sector of the economy including energy, SOEs, Privatization, and Public Finance in terms of right sizing, pension reforms and others which will also be carried actively in next Fiscal year also. Finance Minister stated that the upcoming budget will reflect the strategic direction of Pakistan's economy that will be very much in line with the home grown economic agenda. The Finance Minister also congratulated PSX for hitting record all time high market index on Thursday that according to him show strong confidence of the investors in terms of comprehensive successes, however, he believed that best is yet to come both for PSX (Pakistan Stock Exchange) and Pakistan. The Chairperson of the Pakistan Stock Exchange Dr. Shamshad Akhtar revealed the country's plans to issue both Green Sukuks and Green Bonds, aiming to tap into the US$ 4 trillion Islamic finance and US$ 2.5 trillion green bond markets. With climate adaptation needs projected to reach US$ 348 billion by 2030, exceeding traditional financing capacity, Green Sukuks are seen as a crucial gateway to addressing this gap. She added that Pakistan has significant potential to become a regional leader in Shariah-compliant green finances. Despite the current energy mix being 60% fossil fuels, Green Sukuks can facilitate a transition to renewables. The country boasts over 40,000 megawatt (MW) of solar and 50,000 MW of wind potential, presenting key opportunities for green investment. Additionally, Green Sukuks can finance waste-to-energy projects, further diversifying Pakistan's energy landscape, she added. On the occasion, Advisor to the Finance Minister, Khurram Schehzad, also highlighted two major national challenges: climate change and population growth. He also shared positive development in three key indicators of economic improvement, including a rise in tax-to-GDP ratio from 9.5% to 10.6% and that is expected to reach 11% by FY26, while reduction in debt-to-GDP ratio from 74% to 65%, and an increase in government revenues. Officials said that issuing of Green Sukuk is a landmark move towards sustainable development and environmental stewardship, which Pakistan Stock Exchange (PSX) has successfully launched under the Sustainable Investment Sukuk Framework. These Shariah-compliant Sukuk aim to finance key green initiatives, including renewable energy, pollution control and climate adaptation projects. On the other hand, Investors can also earn competitive returns while contributing to a greener Pakistan, making a positive impact on both the environment and society. Dr Shamshad Akhtar highlighted the significance of Pakistan's inaugural domestic sovereign Green Sukuk, marking a new era in financial innovation rooted in sustainability, inclusion, and accountability. This debut issuance demonstrates Pakistan's commitment to a greener economy, unlocking investments in renewable energy, green transport, and climate-resilient infrastructure. Meezan Bank's President & CEO, Irfan Siddiqui, emphasized the role of Islamic finance in sustainable development, stating that the Green Sukuk combines Islamic finance with climate-resilient investments, offering Shariah-compliant avenues for investors to contribute to Pakistan's green transition. The Sukuk was remarkably oversubscribed by 5.4 times, reflecting strong investor confidence. PSX's MD/CEO, Mr. Farrukh H. Sabzwari, noted that this milestone showcases the growing integration of Environmental, Social, and Governance (ESG) principles in Pakistan's capital market, with more sustainable Sukuk issuances expected in the coming months. The event was attended by key stakeholders, including Mohsin Mushtaq Chandna, Director General (Debt); Muhammad Ali Malik, Executive Director of the State Bank of Pakistan; Nassir Salim, President of HBL; Badiuddin Akber, CEO of CDC; Naveed Qazi, CEO of NCCPL; and prominent members of the financial sector and capital market fraternity. Copyright Business Recorder, 2025
Express Tribune
06-04-2025
- Business
- Express Tribune
Misplaced debt optimism
Listen to article Pakistan's public debt burden remains a pressing issue that warrants careful consideration and proactive management. As the country grapples with economic challenges, the significant increase in public debt - reported at Rs74.103 trillion as of December 2024 -— raises concerns about sustainability and fiscal responsibility. Although the government claims that indicators are improving and the risks associated with this debt are decreasing, its assessment is, at best, subjective. Pakistan's debt remains unsustainable; we have only taken a small step back from the cliff's edge. The recent debt bulletin released by the Ministry of Finance indicates public debt grew by about 10% over the previous year, and even though the government points to a primary surplus and a stable exchange rate as reasons for the controlled rise in debt, we cannot overlook the fact that the debt burden continues increasing due to non-development spending and debt servicing, rather than expenditure in areas that will stimulate future economic returns that could one day help pay down the debt. Furthermore, while the government has managed to finance the federal fiscal deficit almost entirely through domestic borrowing - primarily through the issuance of Pakistan Investment Bonds and Sukuks - reliance on domestic creditors can lead to a higher interest rate and crowding out of private investment. The average time to maturity for domestic debt has improved, suggesting more stability in the short term, but structural vulnerabilities within the economy remain. Internationally, ratings agencies continue to regard Pakistan's debt as highly risky and within the 'junk' range, meaning that the country is dependent on favourable business, financial and economic conditions to meet its obligations. While conditions had been good in the preceding months, US President Donald Trump's trade wars have upended international markets and could spell disaster for us, given our high vulnerability to external shocks and dependence on the US as an export destination.
