Due to the decreasing foreign currency reserves, government is set to float $1 billion Eurobond this month. Government raised $2.5 billion just two months ago by issuing the bonds, however, it seems like that amount has already been consumed.
To save the time, instead of looking for fresh offers, government will analyze the previous offers it received during the issuance of $2.5 billion bonds.
More Loans?
The finance ministry is desperate to raise at least $1 billion. For the same purpose, the ministry wants to complete this move as early as next week. The government is yet to approve these new bonds proposed by the ministry. However, it is also speculated that the ministry might look to go for commercial loans as well to tackle the depleting foreign currency reserves issues.
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Pakistan’s image in international market isn’t very positive either at the moment. “Fitch” a global credit rating agency, downgraded Pakistan’s outlook from “stable” to “negative” .
However, government is reluctant to go for commercial loans considering the elections are already near and it would damage their image.
PML-N government has already taken a total of $40 billion in loans from international lenders to build foreign currency reserves. This is the highest amount any government has borrowed from anyone in the history of Pakistan. The government also raised $13.8 billion by floating bonds alone.
State Bank of Pakistan reported that by Jan 26, country’s foreign reserves had reduced to $13.234 billion from $13.6 billion. This amount also includes the temporary loans of $6.2 billion that government acquired from domestic commercial banks.
Not just loans, the difference between Pakistan’s external debt and its foreign currency reserves has also hit a three-year high, which is bad omen for the economy. It is highly likely that government will have to knock at IMF’s door one last time before their tenure ends.
Via: Tribune
