ISLAMABAD    -   The ministry of finance has initiated the process of issuing Eurobonds and international Sukuk to raise the foreign exchange reserves of the country. The government of Pakistan intends to set up a Medium Term Note (MTN) Programme, covering both Eurobonds and international Sukuk for a period of one year initially.

The ministry of finance has invited financial institutions to submit their proposals to work as Finance Division’s financial advisers for registering, structuring, launching, and executing the MTN programme.

Proposals both for technical and financial for the purpose should be furnished to finance division by October 14, 2019. For purpose, finance division plans to engage two consortia, each consisting of five financial institutions, for issuance of Eurobonds and international Sukuk under the programme.

Pakistan has planned to raise at least one billion dollars from international market by issuing Sukuk bonds in next couple of months that would help in building the country’s foreign exchange reserves. The federal cabinet had already allowed ministry of finance to initiate Medium-Term Notes (MTN) programme covering both Eurobonds and Sukuk.

An official of the ministry of finance informed that government is expecting to raise at least one billion dollars from the Sukuk bonds. The federal government in annual budget for current fiscal year 2019-20 had projected to generate Rs450 billion (around $2.8 billion) for the Sukuk bonds.

The issuance of Sukuk bonds would be part of the government’s plan to borrow $13 billion from foreign sources during ongoing fiscal year.

The selected consortia are expected to guide, advise, manage, coordinate and execute the whole range of activities associated with the programme.  Consortium-l shall consist of five (5) conventional financial institutions and shall assist in issuance of Eurobonds.

Meanwhile, consortium-II shall consist of five (5) financial institutions, including at least two lslamic financial institutions, and shall assist in issuance of international Sukuk.

Issuing Sukuk or Euro bonds in the international market is also part of the government measures to build the foreign exchange reserves. It is worth mentioning here that previous PML-N government had issued Euro and Sukuk bonds worth $7 billion during its five years tenure. It had also serviced $2.6 billion as bonds, which were issued during Musharraf’s era.

Pakistan’s total debt is continuously increasing. The State Bank of Pakistan (SBP) data showed that Pakistan’s total debt and liabilities had enhanced by Rs11 trillion just in first year of the incumbent government and stood at Rs40 trillion.

The data showed that the PML-N had increased Rs15 trillion into public debt and liabilities in five years, while the PTI added up total debt and liabilities by Rs11 trillion just in one year. The public debt and liabilities stood at Rs29 trillion on June 2018 which have now peaked to Rs40 trillion on June 30, 2019.