- Pakistan plans to launch these bonds in next fiscal year.
- Another official at Pakistan's ministry of economic affairs said Pakistan wants to raise an estimate $1.5 billion. Both officials requested anonymity.
ISLAMABAD: Pakistan plans to raise $1.5 billion through Eurobonds to bridge a balance of payments gap for the financial year beginning July 1, two government officials said on Friday.
With the country's fiscal deficit likely to rise as high as 9.4% and a shortfall in revenues due to COVID-19 economic losses, Pakistan desperately needs funds to stave off balance of payment pressure caused by dwindling foreign reserves and a current account deficit.
“Pakistan plans to launch these bonds in next fiscal year. Exact dates and amount can't be confirmed at the moment as it depends on market situation," an official at the finance ministry told Reuters.
Another official at Pakistan's ministry of economic affairs said Pakistan wants to raise an estimate $1.5 billion. Both officials requested anonymity.
The Pakistani economy is likely to contract -1% to -1.5% in the current financial year, which ends in just over a month, on June 30, according to the International Monetary Fund and the country's finance ministry.
The plan is subject to approval from Pakistan's cabinet. Its terms would be made public at launching.
In the current financial year, Pakistan attracted over $4.4 billion in carry-trade funds through government financial instruments, including treasury bills and bonds, offering rates as high as 13%.
Pakistan's central bank recently cut its policy rate drastically to cope with the coronavirus. Over $4.1 billion has flowed out of government instruments to date as the effects of the global pandemic hit markets.
Pakistan is also expecting more multilateral and bilateral external inflows in next financial year, including the IMF, as well as debt relief from G20 countries.
Moody's has placed Pakistan's local and foreign currency long-term issuer B3 ratings under review for downgrade, citing a potential default on private sector debt.