Pakistan has crossed a historic milestone in Islamic finance, with the Government of Pakistan's sovereign Sukuk portfolio passing the Rs10 trillion mark, equivalent to about $36 billion, the finance minister announced on Thursday, 12 November 2026.

The achievement was marked at a gathering in Islamabad hosted by Meezan Bank, bringing together the Ministry of Finance, the State Bank of Pakistan and the joint financial advisers who have helped build the country's Islamic capital market. Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb attended as chief guest, alongside State Bank Governor Jameel Ahmad.

Issuance more than doubled in 2026

The government issued Rs4.179 trillion in Sukuk between January and 31 October 2026, more than double the record Rs2.052 trillion issued in all of 2025. The finance ministry put total 2026 issuance at Rs4.4 trillion, a rise of 113 per cent on the previous year, reflecting how quickly the instrument has grown as a source of government funding.

The Rs10 trillion figure covers both the outstanding amount and total issuances of government Sukuk, which are Shariah-compliant bonds backed by tangible assets rather than interest-bearing debt.

How the market has grown

Since 2008, government Sukuk have been issued mainly under the Ijarah structure, which ties issuance to the availability of tangible state assets. To expand capacity, the government introduced a hybrid structure combining Ijarah with Commodity Murabaha, allowing the same asset base to support a larger volume of issuance.

The launch of tradable three- and six-month Sukuk has also addressed a longstanding gap at the short end of the sovereign Islamic yield curve, providing benchmarks for pricing across the wider Islamic finance market. The short-term instruments are intended to become a viable alternative to conventional Treasury Bills.

What happens next

Addressing the ceremony, Aurangzeb pledged to broaden retail and foreign participation in the Sukuk market after annual issuance more than doubled in 2026. He recognised the contribution of the State Bank of Pakistan and the joint financial advisers, Dubai Islamic Bank (Pakistan) Limited, Bank Islami Pakistan Limited and Bank Alfalah Limited, in achieving the milestone.

The gathering was also addressed by Khurram Schehzad, Adviser to the Finance Minister on Economic and Financial Reforms, while Justice (retd) Mufti Muhammad Taqi Usmani, chairman of Meezan Bank's Shariah Board, delivered the keynote address. Dr Syed Amir Ali, president and chief executive of Meezan Bank, said the Ministry of Finance and the State Bank had played a leading role in expanding the sovereign Sukuk market.

The milestone comes as Pakistan works to deepen its domestic debt market and reduce reliance on conventional borrowing, with Islamic finance now a central part of the government's funding strategy.

Sources: Biz Today, Pakistan TV