In order to shore up dwindling foreign currency reserves, the PTI-led government has decided launching both Euro and Sukuk bonds next month for raising $1.5 billion.
It is yet to see how the government will be able to generate desired interest on upcoming Pakistani papers when some opposition parties are planning for long march by end of the ongoing month.
The increasing political turmoil might increase woes for the government on economic front in weeks and months ahead. The foreign currency reserves nosedived by $724 million during the week ended on September 27, 2019 on account of payment of around $700 million commercial loan to Chinese bank.
Top official sources confirmed to The News on Thursday that the Chinese bank showed its willingness to rollover $700 million loan but its procedural requirement would take a few weeks period so it was expected that the dwindled foreign currency reserves would be again shown as part of the foreign currency reserves after a pause of a few weeks.
According to State Bank of Pakistan (SBP) data released on Thursday stating that the total liquid foreign reserves held by the country stood at $15.003 billion on September 27, 2019.
The break-up of the foreign reserves position shows that foreign reserves held by the State Bank of Pakistan stood at $7.741 billion and net foreign currency held by commercial banks were standing at $7.262 billion. During the week ending on September 27, 2019, the SBP’s reserves decreased by $724 million to $7.741 billion, the reduction in reserves is on account of GOP debt repayments.
The official said that China’s commercial bank agreed to provide a commercial loan of $700 million and it would be materialised within a few weeks period.
On proposed launch of international bonds, the official said that the government advertised for seeking bidding of financial advisers and they were going to hire two consortiums for undertaking these two transactions by the middle of the next month.
“The government is considering placing Motorway-2 as asset to pledge for issuance of Islamic Sukuk bond but the final decision will be taken with next few weeks,” said the official sources.
In order to achieve Net International Reserves (NIR) targets under the IMF condition, the State Bank of Pakistan will have to jack up foreign currency reserves on quarterly basis. The building up of foreign currency reserves is the major target under the IMF programme so the government will have to depend upon rollover of loans and raising of multibillion dollars through issuance of international bonds in the months to come.
Source The News