The federal and provincial governments will raise all new domestic and international financing through Shariah-compliant instruments from 2028 under Pakistan’s roadmap for transition to a Riba-free financial system, according to the Ministry of Finance.
The ministry’s strategy paper on the post-2027 financial system said all financing secured after December 2027 would be arranged through Islamic modes, while existing conventional loans and financing agreements would continue on their original terms until maturity before being converted into Shariah-compliant instruments.
The report identified the conversion of the government’s existing debt portfolio as the biggest challenge in the transition.
To support the shift, the Finance Division plans to set up an Asset Registry Company to hold public assets for the issuance of sovereign Sukuk. The government also intends to introduce a regular Sukuk issuance framework along with an annual issuance calendar.
According to the strategy, the State Bank of Pakistan and commercial banks are in the final stages of developing three-month and six-month Sukuk to support liquidity management, with the framework expected to be completed before December 2027.
The report said amendments to federal and provincial laws were also being planned to create a comprehensive legal framework for Shariah-compliant finance.
The ministry said most conventional banks already have the required technological infrastructure through their existing Islamic banking operations, while training programmes are under way to prepare banking staff for the transition.
It added that the central bank would gradually move towards implementing monetary policy through Shariah-compliant instruments.
According to the report, the federal government, the State Bank, the Securities and Exchange Commission of Pakistan and other stakeholders will jointly oversee the transition through legislative reforms, expansion of Sukuk-based financing, strengthening of the regulatory framework and institutional capacity-building to ensure a smooth shift to a Riba-free financial system after 2027.
