Pakistan to Issue International Bonds in 2024-25 Budget to Raise Over $1.5 Billion
Plans Include Panda, Euro, and Sukuk Bonds to Boost Dollar Inflows and Stabilize Exchange Rate.
In the upcoming 2024-25 budget, Pakistan aims to introduce international bonds, including Panda and Euro/Sukuk bonds, to bring in over $1.5 billion to the national treasury.
This move is designed to increase dollar inflows and prevent pressure on the exchange rate.
Budget planners are finalizing estimates for receipts from external resources for the next budget, but the final decision will depend on the country’s ability to re-enter the international market.
Pakistani officials are preparing new estimates based on the likelihood of Islamabad securing a new agreement with the IMF under the medium-term Extended Fund Facility (EFF). This agreement is expected to improve the country’s credit ratings in the first half of the next fiscal year (July-December).
Government sources stated, “The government is ready to issue Panda bonds to utilize the liquidity available in the Chinese market, with the possibility of issuing bonds worth over $500 million.” However, despite the prediction of raising $1.5 billion through international bonds in the current fiscal year 2023-24, the country’s economic managers have so far failed to secure any foreign income through international bond issuance.
Senior officials mentioned on Thursday to media that the primary reasons are higher interest rates in international markets and the country’s poor credit rating.
Budget planners argued that if Islamabad’s economic managers fail to secure the required foreign income, the exchange rate could face pressure.
The Real Effective Exchange Rate (REER) could be stressed if foreign income is not ensured in a timely manner.
Data indicates that the exchange rate is currently high, and without timely dollar inflows, a sudden adjustment in the dollar against the rupee could occur.
Under the IMF program, one of the conditions for a new deal will be external financing to secure the $6 billion Extended Fund Facility (EFF) bailout package.
To meet the country’s external financing needs, every penny will be accounted for.
The government is planning the next budget 2024-25 based on an average exchange rate of 295 rupees per US dollar.
Federal Finance Minister Muhammad Aurangzeb has already expressed the intention to utilize the Chinese market for issuing Panda bonds.
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