Amundi and Lion’s Head Reaffirm Interest in Pakistan’s Sovereign and ESG Investments

Global investors Amundi and Lion’s Head Global Partners, alongside others, have reaffirmed interest in Pakistan’s sovereign instruments, ESG-aligned investments, and Medium-Term Debt Management Strategy (MTDS), a development with profound tax implications for businesses. Our tax law firm advises clients to prepare for Federal Board of Revenue (FBR) oversight as Finance Minister Muhammad Aurangzeb pushes this economic transformation.

During a London meeting on May 9, 2025, Minister Aurangzeb highlighted macroeconomic recovery, citing a PKR 3.6 trillion primary surplus, 0.3% inflation (April 2025), a current account surplus, and a debt-to-GDP ratio drop from 75% to 65%, boosting sovereign credit ratings, per the Ministry of Finance. Amundi’s Oliver Williams and Lion’s Head’s Maud Le Moine offered technical support for investor communications, credit rating engagement, and energy sector modeling, aligning with MTDS and a planned Panda bond and ESG bond issuance in FY2026. Web context from posts on X reflects investor optimism, but questions linger over debt sustainability.

From a tax law perspective, sovereign investments may stabilize the rupee, affecting customs duties under Section 25 of the Customs Act for importers, while ESG bonds could influence input tax credits under Section 8B of the Sales Tax Act, 1990. FBR audits may target foreign currency transactions, with withholding tax (WHT) at 15% on foreign payments under Section 6 of the Income Tax Ordinance requiring strict compliance. New tax reforms in real estate, wholesale, retail, and agriculture—backed by digitalization—could reshape taxable income under Section 29, per the Minister’s vision.

Critically, the narrative of “transformation” may overstate progress—web sources note IMF pressure on reforms, and X sentiment questions water policy stances and SOE restructuring (Wave 5) feasibility, suggesting tax volatility risks. Clients must stay proactive.

Our firm advises clients to monitor tax reforms, ensure WHT compliance, and prepare for FBR audits, navigating this dynamic fiscal landscape.