Pakistan plans to issue Eurobonds in the upcoming fiscal year after securing improved ratings from international agencies, Finance Minister Mohammad Aurangzeb announced on Tuesday.
During the launch of the Securities and Exchange Commission of Pakistan’s (SECP) Electronic Mortgage Register, the minister stated that the economy has stabilized, and it is crucial for regulators and banks to accelerate growth.
Aurangzeb mentioned ongoing discussions with Fitch Ratings, Standard & Poor’s, and Moody’s, expressing optimism about achieving better ratings. However, he noted that the Eurobond issuance will depend on securing improved ratings, with plans for the launch in the next fiscal year.
To secure $1 billion in climate financing, the minister emphasized the need for Pakistan to present stronger plans and policies to the IMF. He also highlighted ongoing talks with the World Bank, Asian Development Bank, and the Asian Infrastructure Investment Bank (AIIB) regarding climate financing, with favorable outcomes sought from the AIIB.
Aurangzeb expressed hope that the State Bank of Pakistan’s foreign exchange reserves would reach $13 billion by FY25, enough to cover three months of imports. Currently, SBP reserves stand at around $11.2 billion, with an expected inflow of $500 million to raise the total to $11.7 billion, bringing the target within reach.
With a $98 million current account deficit, a 39% increase in remittances, higher export revenues, and increased foreign direct investment, meeting the $13 billion reserves target appears achievable before the end of FY25.
Earlier this week, the State Bank cut its policy rate by 250 basis points to 15%, a move aimed at boosting domestic investment. The Karachi Interbank Offered Rate has fallen to 13%, providing a favorable environment for local investors. However, trade and industry representatives are calling for a reduction to single-digit interest rates, while financial experts urge a cautious approach to further cuts.
Aurangzeb also stressed the government’s focus on improving taxation to meet targets and using digitization to reduce corruption within the Federal Board of Revenue. Efforts are underway to lower power tariffs, as electricity costs remain a significant burden for many middle and lower-middle-class families.
The finance minister concluded by noting that foreign investors are eager to invest in Pakistan, with recent visits by the Prime Minister to Saudi Arabia and the UAE resulting in both governments expressing a commitment to invest in the country.
