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Islamabad: With the IMF now on board, the cash-strapped Pakistan government is now considering meeting most of its external financing needs in the medium term through 10-15 years of international bonds and concessional multilateral loans, according to a media report on Monday.
It also plans to diversify local debt instruments to inflation-based bonds, list government papers on the stock exchange, and issue short-term Islamic and conventional floating rate products, the Dawn newspaper reported.
Last week, the Pakistan government and the International Monetary Fund (IMF) reached a long-awaited staff-level agreement to inject USD 3 billion into the ailing economy after months-long negotiations that pushed the country to the brink of default.
This is part of the new Medium-Term Debt Management Strategy, released by the Ministry of Finance on the weekend, for the fiscal years 2023 -2026, the report said.
“Availing maximum concessional external financing from bilateral and multilateral development partners” is one of the measures under the strategy to increase the average time to maturity of the external debt portfolio over the medium term, it said.
The strategy added that other measures would include “borrowing more in 10 years’ and 15 years’ tenors in the international capital market while keeping the consideration for cost and risk trade-offs”.
At the same time, the government would maximise efforts for contracting fresh commercial loans in relatively higher tenors (three years or more) compared to existing rollover tenures of no more than a year.
In addition, efforts would be geared towards re-profiling the existing stock of commercial loans from the short term to the medium and long term.
Under the strategy, the domestic market will remain the main source of funding to finance the fiscal deficit and refinance existing domestic debt, for which the government is planning to introduce multiple instruments to broaden the investor base and offer diversified investment avenues to investors which are closer to their investment horizons, income preferences, and risk appetite.
PTI