Aurangzeb pushes domestic capital role as Pakistan targets capital market deepening

Finance Minister Muhammad Aurangzeb on Wednesday said Pakistan must increasingly rely on domestic capital to finance investment and growth, arguing that strengthening capital markets will be key to unlocking long-term funding.

Speaking at the Capital Market Development Fund (CMDF) signing ceremony organised by the Securities and Exchange Commission of Pakistan (SECP) in Islamabad, the minister said local investors are already demonstrating strong capacity to finance major transactions.

He pointed to the recent privatisation process of Pakistan International Airlines, where collective bids of around $1.2 billion were received, calling it evidence of significant domestic liquidity.

Aurangzeb said the government’s broader strategy is to mobilise indigenous capital as part of national economic security, reducing reliance on external financing for areas such as reconstruction, rehabilitation and development.

He noted that equity markets have shown resilience despite volatility linked to geopolitical tensions over the past four to six weeks. More than 220,000 new investors have entered the market in the last two years, largely driven by youth participation through digital platforms, including a record 24,000 new accounts in April.

However, he warned that the debt capital market has moved in the opposite direction and requires urgent correction. He called for accelerated development of corporate bonds, alongside regulatory and tax reforms in coordination with the Ministry of Finance and the Federal Board of Revenue (FBR).

The minister also said the government will expand issuance of Sukuk instruments and deepen capital market tools to reduce pressure on bank financing and address concerns about crowding out the private sector.

He stressed the importance of targeted investor education, particularly for younger participants who now make up the bulk of new entrants to the market.

Regulators, he said, must balance market expansion with investor protection and fiscal discipline as participation broadens.

Aurangzeb further said additional privatisation transactions, including in the power distribution and financial sectors, are in the pipeline, alongside efforts to streamline public-private partnership structures.

He added that capital market development will remain central to the government’s financing strategy going forward.