Pakistan is preparing to enter China’s capital markets for the first time through the issuance of a yuan-denominated Panda bond, Finance Minister Muhammad Aurangzeb said, according to Reuters.

Aurangzeb said the planned issue, valued at $250mn, would mark the first tranche of a broader $1bn programme aimed at diversifying Pakistan’s external financing sources. The bond is expected to carry backing from the Asian Development Bank and the Asian Infrastructure Investment Bank, Reuters reported.

Speaking at a press conference on May 9, the finance minister said an announcement regarding the Panda bond initiative was expected within days. The move comes as Pakistan seeks to stabilise its economy and shore up foreign exchange reserves amid mounting external pressures.

Aurangzeb said Pakistan’s economic indicators were starting to improve, pointing to expansion in exports and remittance inflows despite the Middle East crisis. Pakistan remains heavily dependent on imported fuel and gas, leaving it vulnerable to regional energy supply shocks.

The comments followed the recent release of around $1.32bn in fresh funding from the International Monetary Fund under two ongoing lending programmes, according to Reuters.

Pakistan is also evaluating alternative external borrowing options, including Eurobonds and commercial debt facilities, as it looks to replace a $3.5bn funding arrangement from the United Arab Emirates and maintain adequate foreign currency reserves. The country is additionally expecting further financial assistance from Saudi Arabia, which is anticipated to provide $3bn in support to help narrow Pakistan’s financing gap.