Finance minister pushes faster capital market reforms to deepen corporate debt market

Finance Minister Senator Muhammad Aurangzeb on Friday directed authorities to accelerate capital market reforms, stressing the need to develop Pakistan’s corporate debt market to reduce reliance on bank financing and expand long-term funding options for businesses, particularly small and medium enterprises (SMEs), the ministry said in a statement.

Chairing a meeting of the Capital Market Development Council (CMDC), the finance minister reviewed progress on capital market reforms and said that while Pakistan’s equity market had shown encouraging progress, the corporate debt market remained underdeveloped relative to the economy’s financing requirements.

He said deepening the debt capital market would help diversify financing sources, promote market-based funding and create a more balanced and resilient financial ecosystem.

The meeting reviewed an ongoing external study on developing Pakistan’s local currency-linked bond market. According to the Finance Division, the study will cover reforms related to sovereign financing, non-bank financial institutions, primary dealers, secondary markets, market infrastructure, hedging and derivatives, and the broader capital market framework.

Aurangzeb directed that the study should provide practical, evidence-based recommendations supported by international best practices to guide future reforms.

The council also reviewed findings from surveys and stakeholder consultations conducted by the Securities and Exchange Commission of Pakistan (SECP) on challenges faced by the country’s top 100 listed companies in accessing the corporate debt market. The finance minister called for broader engagement with medium-sized enterprises and growth-oriented businesses that could benefit from capital market financing.

To strengthen institutional capacity, Aurangzeb directed the SECP and the Pakistan Stock Exchange (PSX) to establish dedicated Debt Desks at the senior management level with clear mandates, measurable performance targets and responsibility for overseeing implementation.

He also stressed the need to improve competition among market intermediaries and infrastructure providers to enhance efficiency, improve service quality and reduce transaction costs for issuers and investors.

The meeting discussed simplifying the corporate debt issuance process through closer coordination among the SECP, PSX and the Central Depository Company (CDC). The finance minister called for a one-window listing framework supported by standardized procedures, digital integration and simplified corporate debt listing workflows to improve transparency and ease of access.

Participants also discussed measures to expand Pakistan’s Islamic capital market, including the domestic Sukuk market, improving secondary market liquidity, promoting green and sustainable financial instruments, taxation reforms, SME preparedness, financial literacy and digital investment platforms.

Emphasising implementation, Aurangzeb said future work of the Capital Market Development Council should be organised through thematic working groups with clearly defined responsibilities, timelines and regular progress reviews.

The meeting was attended by the SECP chairman, representatives of the State Bank of Pakistan, Pakistan Stock Exchange, Central Depository Company, National Clearing Company of Pakistan Limited, Pakistan Banks’ Association, Pakistan Business Council, Tax Policy Office and senior Finance Division officials.