Senator Muhammad Aurangzeb, Pakistan's finance minister, said on Monday that Pakistan is pursuing a medium-term debt strategy to find more kinds of funding, push repayment dates further out, and keep a door open to global investors. The goals, he said, are milder strain when external bills come due and a better score from credit-rating agencies, the Associated Press of Pakistan reported.
He spoke on Bloomberg television while IMF and World Bank officials held their yearly meetings in Bangkok. The International Monetary Fund (IMF) lends to governments under stress and reviews their policies. The World Bank finances development work.
No hurry to borrow abroad
Aurangzeb said Islamabad will not scramble for fresh overseas loans in the fiscal year already under way. External bills, he argued, can be met without leaning on global bond buyers for now.
The country has come back to those markets after an absence lasting four years. April brought a private placement of bonds worth $750 million. Roughly three weeks before Monday's remarks, it sold Eurobonds worth $3 billion. A Eurobond is a note aimed at foreign buyers and usually paid in dollars.
Orders were twice as large as the amount for sale. Participants included investors based in Asia, the Middle East, Europe and the United States.
Panda bonds, yuan notes sold in China, worth $250 million have also been sold, inside a programme capped at $1 billion, and further deals are planned. Mandates have been handed out for a sukuk, an Islamic bond that avoids conventional interest, and for a first-time note priced in rupees while payment is made in dollars. Officials will study whether Eurobonds already outstanding could be turned into digital tokens.
Ratings and the shape of the debt
Under that medium-term strategy, Aurangzeb wants part of the near-term foreign debt switched, within two or three years, into obligations that fall due later, so the risk of refinancing large sums at once is lower. He said that switch would leave the overall external debt pile unchanged.
Rating agencies have raised Pakistan's sovereign grade three times, with the moves dating from April of the previous year, and the mark now sits in the B band. Should that progress hold, a step up to B plus is possible near the start of the coming fiscal year. The more distant hope is a double-B grade.
Washington, reserves and growth
Policy, he said, is moving away from aid and toward trade plus investment. Washington talks cover customs duties and a framework deal, and they are already under way.
America's export-credit agency, the Export-Import Bank, and Washington's International Development Finance Corporation are discussing possible work on farming, information technology, and minerals. The Exchange Stabilization Fund, a US Treasury pool that can support currencies, also came up, though Aurangzeb said nothing is agreed. Plans to tap global bond markets will proceed either way.
Foreign-currency reserves stood at a record $21.4 billion several weeks before the interview, covering roughly a quarter of a year of imports. Three years before that, import cover was about fourteen days. He tied much of the rebuild to dollars purchased in the market, not fresh loans, and said he is comfortable the rupee can remain steady.
On the growth figures he cited, output went from a 0.3 percent contraction three years previously to 2.6 percent in the year that followed, and then to 3.7 percent in the fiscal year just finished. The government expects the pace to top 4 percent in the fiscal year now running. Collection goals for the July-to-September period were met. The tax take relative to GDP has moved into double figures.
Fuel, food and a longer war
Aurangzeb said the government is watching how war in the Middle East could affect prices and growth. Since the fighting began in March, fuel has been secured so pumps did not run empty and drivers were not stuck in lines.
Crude and gas needed for October are already covered. Buying plans for November crude and LNG, liquefied natural gas chilled for shipping, are still being drawn up.
If the regional fighting lasts, he warned, authorities may face hard choices on fuel purchases and on how supplies are shared. Food supply, he said, is no less important. Stores of urea and separate DAP holdings (diammonium phosphate, a widely used crop nutrient), along with production inside the country, give Pakistan a firmer fertiliser position.
Subsidies directed at vulnerable households have been used to soften the war's blow. He added that Pakistan's engagement with the US administration and relations of trust with Iranian leadership contributed to reconciliation efforts in Islamabad.
