Pakistan will be launching Islamic bonds worth $500 million soon. This is in anticipation of the three year I.M.F bailout package that will be closing soon.
The government is trying to raise its foreign reserves so that they have enough to pay the I.M.F when the time comes. Its looking at key markets, specifically for the “Sukuk” bond. An official describes the Sukuk bond as being Sharia compliant and said that it offers profits not interest.
End of the I.M.F Bailout Package
I.M.F’s three year bailout package was worth $6.6 billion. Last month, I.M.F announced that they will be releasing the last instalment of the bailout package, worth $102 million.
Finance Secretary, Masood Khan, said:
We have begun the roadshow in Dubai today and will go to London, Boston, and New York in the same leg
He further added that Pakistan needs to tap into the global capital market. This is to maintain its foreign exchange reserves which currently stand at $22.69 billion. He also said that the purpose of the Sukuk bonds is to meet the future demand of the forex.
Government to Launch More Bonds Soon
The $1 billion worth of 1o year Eurobonds are also ending. Shajar Capital’s Rehan Ateeq says:
After the IMF package is over and amid falling exports, Pakistan needs to raise the funds from different sources. We expect with the maturity of IMF loan as well as the Eurobond, the government would come up with more such bonds soon.
A total of $4.05 billion worth of Eurobonds and Sukuks have been issued thus far. Pakistan’s economy is expected to grow by 5.5 percent in the current fiscal year compared with 4.7 percent in last year. All of this comes amidst growing inflation rates and increasing taxes. The economy may be growing faster, but this comes at a cost of squeezing pennies out of every citizen in Pakistan.