Pakistan is set to launch its first Sovereign Domestic Green Sukuk next month to attract climate financing for environmentally sustainable energy projects, according to Khurram Schehzad, Advisor to the Finance Minister. He made the announcement during a briefing session held at the Pakistan Stock Exchange (PSX) in Karachi, alongside key officials including PSX Chairperson Dr. Shamshad Akhtar, PSX MD and CEO Farrukh Sabzwari, and Eraj Hashmi, Director of Debt at the Ministry of Finance.
The session drew significant interest from representatives across the financial sector, including commercial banks, brokerage firms, asset managers, and microfinance institutions—reflecting strong market support for Pakistan’s transition to green energy through capital market innovations.
The Green Sukuk, to be listed on the PSX, will be a three-year Shariah-compliant financial instrument with a variable rental return. Aligned with Pakistan’s national climate and infrastructure goals, this issuance aims to establish a foundational green Sukuk market in the country.
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Schehzad emphasized that this Green Sukuk is a major step towards integrating Pakistan into the global environmental movement. He noted that the country has made notable macroeconomic progress, citing positive GDP growth, increased foreign reserves, fiscal sustainability, and improved public financial management.
Initially expected to raise between Rs 20 to 30 billion, the funds will be channeled into three eco-friendly hydropower projects located in Sindh, Balochistan, and Gilgit-Baltistan. The initiative has also received support from the International Monetary Fund (IMF), which praised Pakistan’s green financing efforts and signaled interest in further cooperation.
These projects aim to provide low-cost electricity and reduce carbon emissions, while offering attractive returns to investors and fostering development in underprivileged regions.
PSX Chairperson Dr. Shamshad Akhtar reflected on past efforts to develop Islamic finance instruments in Pakistan and reiterated the need for more Sukuk offerings to attract investment both domestically and internationally.
PSX CEO Farrukh Sabzwari highlighted the stock exchange’s role in facilitating Sukuk auctions, noting that since December 2023, PSX has hosted 19 auctions of seven types of Ijarah Sukuks totaling Rs 2.35 trillion. He outlined future plans, including a Delivery Versus Free (DvF) facility, a dedicated Sukuk data portal, and integration with global financial platforms to enhance market visibility.
Sabzwari stressed the need for improved investor education to unlock the full potential of Pakistan’s Sukuk market, pointing to rising trading volumes as a sign of deepening market participation.
Eraj Hashmi added that for the first time, a Sustainable Investment Sukuk Framework is being developed in Pakistan. He encouraged stakeholders to provide feedback to help refine the initiative and ensure its success.
