Pakistan recorded a landmark year for Islamic finance in 2025, issuing more than PKR 2 trillion in Sukuk, the highest-ever volume raised through Shariah-compliant instruments in a single calendar year, the Ministry of Finance said.

The issuances were carried out by the Ministry of Finance’s Debt Management Office with support from its Joint Financial Advisors, marking a major expansion of Islamic instruments within the government’s domestic debt portfolio.

According to official data, the government conducted 61 Sukuk issuances during the year across one-, three-, five- and 10-year maturities, using both fixed-rate and variable-rate structures. Total Shariah-compliant issuance reached approximately PKR 2.5 trillion in 2025.

A defining development was the launch of Pakistan’s first-ever Green Sukuk, which was oversubscribed by 5.4 times, highlighting strong investor demand. The underlying assets supporting the Green Sukuk’s cash flows included Pakistan Railways, the National Highway Authority, the Civil Aviation Authority, the Pakistan Airports Authority, the Pakistan Sports Board, Karachi Port Trust and the Trade Development Authority of Pakistan.

The strong showing in 2025 builds on sustained growth in the Islamic debt market. Between 2019 and 2025, Pakistan issued a cumulative PKR 8.7 trillion in Sukuk. Outstanding Sukuk now stands at PKR 6.6 trillion, while total outstanding Shariah-compliant government instruments have reached about PKR 7.1 trillion.

Structural deepening

The expanding issuance has increased the share of Islamic instruments in the government’s domestic securities portfolio to around 14.5% as of December 2025, up from 12.6% in June 2025.

The Ministry of Finance has set a target of raising that share to 20% by FY28.

“The pace of growth suggests Islamic instruments are moving from a niche segment to a core pillar of Pakistan’s domestic debt strategy,” said-based fixed-income analyst.

“The success of the Green Sukuk, in particular, shows investors are responding not just to Shariah compliance but also to strong asset backing and thematic issuance.”

Officials said the rising share of Shariah-compliant instruments reflects the structural deepening of Pakistan’s Islamic capital market, sustained investor confidence and strengthening sovereign debt management, while supporting macroeconomic stability and fiscal sustainability.

With a stabilizing macroeconomic outlook, disciplined debt strategy and a clear roadmap for Islamic finance, analysts say Pakistan is building a more resilient, diversified and future-ready government securities market.