Pakistan started vigorous preparations for its return to the global bond market after a gap of four years and appointed global advisors for bond issuance in the next few weeks, says Federal Finance Minister
Federal Finance Minister Muhammad Aurangzeb told a foreign magazine, Bloomberg, during the World Economic Forum in Davos, that the government will begin the process of appointing global advisors for bond issuance in the next few weeks. The government is examining which financial instrument, among dollar bonds, euro bonds, or sukuk bond would be more suitable.
Finance Minister Muhammad Aurangzeb said that Pakistan is also preparing to issue “panda bonds” in Chinese currency for the first time, a move that is part of a strategy to provide direct access to global investors, especially the Chinese market.
The Finance Minister said that inflation, which had once reached about 40 percent, is now in single digits. Global rating agencies Moody’s, S&P, and Fitch have upgraded Pakistan’s credit rating. Foreign exchange reserves are expected to be equal to three months of imports by the end of the current fiscal year. The government wants to adopt an export-led growth strategy so that the balance of payments crisis does not recur like in the past.
The Bloomberg report said that Pakistan had been out of the global bond market after 2022, but financial discipline, tax reforms, and subsidy reduction under the IMF program have restored confidence. Economists are also calling this development positive.
According to economists, Pakistan’s return to the global bond market is a clear indication of the restoration of confidence among global investors, which will provide financial stability for the country. The issuance of Panda Bonds will give Pakistan direct access to China’s capital market, which will increase investment.
Economists said that export-led growth will bring long-term benefits, with the reduction in inflation and increase in foreign exchange reserves reflecting the positive effects of reforms.
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