KARACHI: The Advisor to Finance Minister Khurram Schehzad, Wednesday, announced that Pakistan is going to launch Sovereign Domestic Green Sukuk in the coming month to secure climate financing for environment friendly energy projects.
He was addressing a briefing session on the GoP Sovereign Domestic Green Sukuk along with Chairperson PSX Dr Shamshad Akhtar, MD and CEO PSX Farrukh Sabzwari and Director Debt Ministry of Finance Eraj Hashmi here at the Pakistan stock exchange Karachi.
The session witnessed substantial engagement from representatives of commercial banks, brokerage firms, asset management companies, and microfinance banks that underscored the financial sector’s strong commitment to supporting Pakistan’s green transition through innovative capital market solutions.
The session was briefed that the PSX listed 3 year Green Sukuk will be a shariah compliant instrument with a variable rental rate. The Green Sukuk is aligned with national climate and infrastructure targets and will pave the foundation of the green Sukuk market in Pakistan.
Khurram Schehzad, at the occasion, termed the Green Sukuk as a big step towards joining global environment movement and said that Pakistan has achieved macroeconomic stability with positive GDP Growth, adequate foreign exchange reserves, Primary surplus, fiscal sustainability and improving public sector financial management.
Government has achieved fiscal and debt management targets and Tax to GDP and Debt to GDP ratios have been improved significantly while key reforms in five major areas were initiated to optimize public finance, he noted and vowed that we have to carry forward the economic growth on a sustainable basis.
“We are expecting to initially generate Rs 20 to 30 billion depending on the market dynamics at the time of launch while it would further be expanded afterwards,” the Advisor to the Finance Minister said while talking to APP. He added that the investment attracted through the Green Sukuk will be utilized for 3 environment friendly hydro power generation projects in Sindh, Balochistan and Gilgit Baltistan.
Pakistan is among the most vulnerable countries to climate change and environmental pollution and the government has devised multiple measures for climate financing, he stated and said that the International Monetary Fund has also lauded the green initiatives and expressed willingness to provide more funding in this regard.
The green Sukuk financed projects will not only generate low cost electricity but also help reducing the carbon emissions and environmental pollution, he said adding that the Green Sukuk will offer better returns to investors besides providing development opportunities to less developed areas of the country.
The Chairperson PSX Dr. Shamshad Akhtar, reflecting on her efforts as then finance minister of the country for issuance of Islamic Sukuk and stated that PSX resolved to have more Sukuk and rigorous consultations were carried out for the purpose.
We need more Sukuks to conduct business at domestic as well as international levels as more business in this area will attract further investment in the market, she underlined.
The managing director and CEO of Pakistan Stock Exchange Farrukh Sabzwari highlighted the role of PSX in the development and auctioning of the Government of Pakistan’s Ijarah Sukuk and said that since December 2023, PSX has facilitated 19 auctions of seven different types of Ijarah Sukuks, with a total issued value of Rs 2.35 trillion.
To enhance secondary market trading, PSX has undertaken several initiatives while future plans included the introduction of the Delivery Versus Free (DvF) facility, the creation of a dedicated data portal for Sukuks on the PSX platform, and the display of Sukuk data on global financial platforms, he said adding that these initiatives aim to further enhance the outreach of the Sukuk market in Pakistan.
Despite these advancements, Mr. Sabzwari emphasized the importance of raising awareness and improving investor education to unlock the full potential of the Sukuk market. “The increase in trading volumes is a promising indicator of market deepening and financial inclusion. By further educating investors, we can drive even greater participation in this vital segment of Pakistan’s capital markets,” he said.
The Director Debt at Ministry of Finance, Eraj Hashmi, speaking at the occasion informed that it is for the first time that a Sustainable Investment Sukuk Framework is being developed in Pakistan.
He said that most of the matters have been sorted out in a stakeholders’ meeting here at Karachi. Urging the stakeholders to extend guidance and suggestions he said that the government will always welcome their feedback and suggestions.
