Karachi: Pakistan’s de facto finance minister denied the government will issue international bonds, citing high interest rates and a lack of time before his administration is dissolved ahead of elections in July.
Contradicting Minister of State for Finance Rana Afzal Khan, who told Bloomberg last week that Pakistan may raise about $2.5 billion (Dh9.18 billion) in debt before the vote, Miftah Esmail said the government needs to repay up to $2.5 billion this year, which can be drawn from the central bank’s foreign reserves.
“The government’s tenure is ending in May, which is just two months away,” Esmail said in an interview on the sidelines of a conference in Karachi on Monday. “It will take at least six weeks if I approve it today. This is not going to happen. We don’t need this and we’re not going to do this in this fiscal year.”
Pakistan last issued dollar debt four months ago to shore up deteriorating finances with its economy showing increasing signs of vulnerability. Its current account and trade deficits have widened as exports lag regional peers, while foreign-exchange reserves have dropped 30 per cent to $12.1 billion in the past year. That’s prompted some analysts to speculate that Islamabad may need to go to the International Monetary Fund for its 13th bailout in three decades.
Ismail said in an interview earlier this month that Pakistan was considering issuing Chinese currency bonds, but wasn’t going to go back to the IMF after its last loan programme ended in September 2016. At the conference on Monday he said that the nation’s imports will start to wane next year and that exports are “growing at a healthy pace.”
“I am also concerned that the current account deficit is very high and we are controlling it,” Esmail told Bloomberg. “We don’t need to borrow from China as our reserves level is well managed — right now we have loans from commercial banking easily available.”
The government may issue up to 100 billion Pakistani rupees ($902 million; Dh3.31 billion) of local debt — Islamic-compliant sukuk — by May, he said. Internationally “it does not suit us rate wise.”
Investors have also been cautious on Pakistan after the Supreme Court in July disqualified Nawaz Sharif as prime minister following a corruption probe. Pakistan’s benchmark stock index was the worst performer globally last year, though it has seen a measured rebound since. In December, Esmail took over the ministry portfolio in an informal capacity after Finance Minister Ishaq Dar, who faces arrest in Pakistan on graft charges, sought medical treatment in London.
