Pakistan will adopt a cautious approach in borrowing from global financial markets, while the government is working on alternative sources to reduce the pressure on external debt repayments and meet long-term financial needs. According to Finance Minister Muhammad Aurangzeb, there will be no rush to borrow from global capital markets this fiscal year.
In an interview with Bloomberg, the Finance Minister said that Pakistan’s strategy aims to increase access to global investors and make debt management more sustainable. According to him, the government will decide on the maturity, cost and timing of the loans by keeping in mind the global financial conditions.
Muhammad Aurangzeb said that Pakistan issued Eurobonds worth $3 billion about three weeks ago, for which the demand received was almost double the volume offered. According to him, investors from Asia, the Middle East, Europe and the US participated in the issuance. Pakistan has regained access to global capital markets after a gap of four years.
The government is also increasing its chances of raising capital from the Chinese bond market. According to the Finance Minister, Pakistan has so far issued Panda Bonds worth $250 million, while preparations are underway for further issuance under a $1 billion programme. In addition, the possibilities of Islamic sukuk and digital tokenisation are also being examined.
The Finance Minister says that there is no need to borrow additional money from global markets to meet external financing requirements this fiscal year. The government wants to convert some short-term external debt into long-term debt to reduce the pressure of immediate payments. However, the success of this strategy will depend on the cost of debt, available financial resources and interest from global investors.
He also said that Pakistan’s sovereign credit rating has improved three times since April last year, and the country is now in the B category. According to the finance minister, if the current progress continues, Pakistan could try to achieve a B+ rating by the beginning of next year. The government’s long-term goal is to further improve the rating.
Muhammad Aurangzeb said that Pakistan’s economic strategy is shifting from aid dependence to trade and investment. Trade talks with the US are also ongoing, while the government is focusing on rupee stability, foreign exchange reserves and inflation.
The real challenge for Pakistan is not just to access new loans but also to keep their cost and duration within the tolerance of the economy. Caution in debt-related decisions will remain important in the future due to the uncertainty in global markets and the potential economic impact of the Middle East conflict.
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