A news report published in a section of press claiming that Pakistan’s foreign exchange reserves are depleting and that it would not be possible to float bonds unless the stalled IMF programme is revived, is completely fallacious and misleading on all three counts.
First, Pakistan’s foreign exchange reserves are stable and certainly not depleting. The marginal fall in reserves referred to in the news item is because of the outflows of loans taken from commercial banks. The Ministry of Finance has already completed the process for refinancing of these loans and the funds are expected to flow back in during the next two to three weeks. More so, the stability in our foreign exchange reserves is reflected in the improving exchange value of the rupee.
Second, the IMF programme has not stalled. The Government of Pakistan, including the Ministry of Finance and the State Bank of Pakistan as well as all ministries concerned, are in constant consultation with the IMF regarding the different policy initiatives and interventions currently being undertaken. As a trusted development partner and economic advisor, the IMF is consistently guiding and steadfastly supporting the Government during these unprecedentedly difficult times created by the Covid-19 pandemic. As the Ministry of Finance has clarified earlier also, we can no longer view the IMF programme in the conventional sense. Programme benchmarks, of course, remain critical, but their timing has to be adjusted according to grave socioeconomic challenges posed by the pandemic.
Third, Pakistan’s ongoing Medium-Term Note (MTN) Programme for the issuance of Eurobonds/international Sukuk is on track. The Ministry of Finance has already initiated the process for engagement of Financial Advisors, which is expected to be completed by mid-November 2020. After completion of all required formalities, the international capital markets will be tapped during January/February 2021. It must be noted that yields on Pakistan’s international bonds have returned to pre-Covid levels and these bonds are trading at a premium, indicating the confidence of global investors in Pakistan’s economy. Therefore, the Government does not feel any cause of concern with respect to new issuances and the execution of the MTN programme.
The Ministry of Finance would like to make it very clear that Pakistan’s bond programme or its external sector stability is not under any kind of threat, as has been falsely claimed in the news report in question.
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