Pakistan May Issue $2 Billion Eurobonds in FY24 to Manage IMF Absence

The government wants to raise $2 billion through Eurobonds in the next fiscal year to enhance liquidity while it waits for something positive from the International Monetary Fund (IMF).

External inflows from multilateral and bilateral creditors are estimated at only $6.2 billion next year, 30 percent less than estimates for the current fiscal year, according to Express Tribune.

The $6.2 billion spread excludes any inflows from Eurobonds, commercial loans, or the IMF loan.

According to the report, the government is indeed planning to raise $2 billion using Eurobonds for the fiscal year 2023-24. But it must first gain the trust of the IMF since it will be tough to get new loans and issue sovereign bonds in the absence of an IMF deal.

It bears mentioning that the government’s efforts this year to obtain capital market financing were useless due to Pakistan’s poor credit rating issued by three major international rating agencies. The cash-strapped nation was expected a $3 billion bailout from the IMF in the current fiscal year but has received just $1.2 billion.

Prime Minister Shehbaz Sharif last week discussed extending Pakistan’s $6.5 billion loan program with IMF Managing Director Kristalina Georgieva. The lender informed the premier that no additional extension of the present program, which expires on June 30, was conceivable.

Hence, the finance ministry is preparing two scenarios for the coming fiscal year, one with and one without IMF assistance.

In the absence of an IMF scenario, inflows would be too low, and the government is leaning heavily towards betting on China when the time comes.

Overall, the government expects to receive $5.3 billion from multilateral lenders in the next fiscal year, which was $2.3 billion less than projections for fiscal year 2022-23.

In comparison to this year’s $2.6 billion, Pakistan expects $2.3 billion in fresh World Bank loans in the coming fiscal year.

Similarly, the South Asian country is expecting another $2 billion in loans from the Asian Development Bank (ADB) in the new year, compared to $3.2 billion projected for the current fiscal year.