No decision yet on issuing bonds in int’l market due to unwanted situation

Pakistan struggling to get $3.5 billion from international commercial banks due to higher interest rate

ISLAMABAD  -  The government has not de­cided yet to issue bonds in international market due to the unwanted situation as Pakistan is struggling to get $3.5 billion from interna­tional commercial banks due to higher interest rate, which would affect the government plan to increase the country’s foreign exchange reserves. The budgeted inflows from foreign commercial banks ($3.5 billion) and interna­tional capital markets ($1.5 billion) seem unlikely to ma­terialize, but it is planned to mobilize $ 0.5-1.0 billion from foreign commercial banks as new financing, according to the official documents. 

Meanwhile, the government is also struggling to issue bonds in international market. It is worth mentioning here that Pakistan has received $8.16 billion loans from inter­national lenders in the first six months (July to December) of the current fiscal year. The country has received $5.96 billion in budget and project financing and another $2.2 billion came in State Bank of Pakistan’s account. The in­flows helped in building the country’s foreign exchange reserves, which earlier were depleting. The major financ­ing of $3 billion came from Saudi Arabia and the United Arab Emirates (UAE). The IMF disbursed $1.2 billion.

An official of the ministry of finance informed that the new government would de­cide about the issuance of bonds in international mar­ket after reviewing the situa­tion. Gross external financing needs for FY24 will amount to approximately $25.0 bil­lion (including the current ac­count), of which about $13.8 billion is amortizations of the public sector. Ahead of the SBA approval the governemnt secured $5.6 billion in addi­tional financing commitments from bilateral, multilateral, and commercial partners, of which over $3 billion has al­ready been disbursed. The government has also secured commitments from these partners regarding $7 billion in rollovers, $1 billion in re­financing of maturing debt, and $1.2 billion in amortiza­tion savings from a debt re­arrangement covering some existing external loans. In line with program financing com­mitments, key bilateral credi­tors will at least maintain their exposure to Pakistan.

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