ISLAMABAD: Pakistan has asked the International Monetary Fund (IMF) to relax conditions under the $6 billion Extended Fund Facility (EFF) relating to the Financial Action Task Force (FATF) and issuance of sovereign guarantees to help raise over $4 billion from domestic and international markets, reported Dawn.
Pakistan has budgeted about $3 billion worth of bonds — Islamic Sukuk and Eurobond — to be launched in the international capital markets during the current fiscal year to meet targets under the EFF for foreign inflows. Separately, the government has planned to raise about Rs200 billion from domestic Islamic banks for the power sector to scale down circular debt, according to the report.
“We are dying to complete these transactions at the earliest,” a senior official was quoted as saying in the report, adding that the capital market conditions were never as conducive as at present. He said the return on bonds had plummeted to almost zero in the international capital markets and investors were finding it hard to secure profits on secured papers. “This provides an ideal opportunity for Pakistan to tap international capital markets to secure sovereign bonds at a minimal interest rate,” the official said.
Pakistan had last tapped the international capital markets in 2016 at about 8.25 percent mark-up when average yield hovered between 3 percent and 5 percent for other countries.
Likewise, the government had negotiated Islamic financing worth around Rs200 billion for the power sector from domestic banks in recent months on top of another Rs200 billion secured earlier this year, claimed the report.
The official quoted in the news report said the finance ministry had already taken up the matter of separating the FATF from the IMF-supported economic programme on the sidelines of recent IMF/World Bank meetings in Washington. The Pakistani delegation, led by Adviser to the Prime Minister on Finance and Revenue Dr Hafeez Shaikh and comprising State Bank Governor Dr Reza Baqir and Finance Secretary Naveed Kamran Baloch, had also met the management and governors of the IMF.
Officials said the authorities had argued that the FATF had a very wide scope, at times of geo-political nature, having no direct link to the economic support package which should be dealt purely on the basis of financial and monetary policies.
Another official quoted in the report said Pakistan was considering launching at least one of the two bonds — Islamic Sukuk or Eurobond — before the end of December this year and complete the budgeted $3 billion target before June next year.
An IMF team led by Mission Chief to Pakistan Ernesto Ramirez-Rigo is currently in Pakistan for first review under the $6 billion bailout package and will wind up the visit by Nov 7. The successful completion of the review would enable Pakistan to draw another $453 million from IMF in the first part of December this year, taking the total amount to almost $1.44 billion.
