Pakistan Launches First PKR 30 Billion Sovereign Domestic Green Sukuk to Support Climate Projects

ISLAMABAD, May 21, 2025 – In a significant step toward sustainable finance, Pakistan has launched its first Sovereign Domestic Green Sukuk, valued at PKR 30 billion, on the Pakistan Stock Exchange (PSX). The Shariah-compliant bond is aimed at funding environmentally responsible infrastructure projects, including the development of three new dams.

Structured under the Ijarah (lease-based) model, the three-year Sukuk will carry a variable rental rate and is issued in accordance with Pakistan’s Sustainable Investment Sukuk Framework. Proceeds will be allocated solely to eligible green and climate-resilient projects, aligning with the government’s focus on long-term, cost-effective borrowing solutions.

Finance Minister Muhammad Aurangzeb, addressing the launch event virtually, described the issuance as a sign of increasing investor trust in the country’s financial markets. He reaffirmed the government’s commitment to introducing more innovative financial instruments for both domestic and international investors. “This Green Sukuk marks a milestone in our transition from short-term borrowing instruments to sustainable, long-tenor financing options,” he said.

With this issuance, Shariah-compliant debt now accounts for 14% of Pakistan’s PKR 37 trillion domestic debt portfolio. Meezan Bank led the transaction as joint financial advisor, alongside Dubai Islamic Bank, Bank Islami, and Alfalah Islamic. The Sukuk is accessible to a wide range of investors, including institutions, non-resident Pakistanis, retail investors, Roshan Digital Account holders, and international participants.

The launch coincided with Youm-e-Tashakur (Thanksgiving Day) and came as the PSX touched a record high of 119,961.91 points. Finance Minister Aurangzeb expressed optimism about continued market growth, referencing positive global investor sentiment following his recent visit to London.

Looking ahead, Aurangzeb announced plans to issue a Panda Bond—denominated in Chinese Yuan—by the end of 2025, marking Pakistan’s entry into China’s capital markets and expanding its international financing footprint.

At the same event, Finance Ministry Advisor Khurram Schehzad highlighted improvements in Pakistan’s economic indicators, including a decline in the debt-to-GDP ratio from 74% to 65% and a rise in the tax-to-GDP ratio from 9.5% to 10.6%, with a target of 11% by FY26. He emphasized that instruments like the Green Sukuk are vital to addressing long-term challenges such as climate change and rapid population growth.