The government has deferred its plans to issue a $1.5 billion international bond, said Caretaker Finance Minister Shamshad Akhtar, stressing that the country will have to go for more IMF loan programmes for some time as the economy remains fragile.
Her remarks came a day after the government reached a staff-level agreement with the International Monetary Fund on a nine-month bailout package.
During a press briefing, Dr Akhtar outlined key aspects of the IMF agreement, affirming the government’s commitment to regular tariff adjustments, including a planned gas price hike in January to prevent the accumulation of circular debt in both the gas and power sectors.
She said Pakistan would also need to adhere to the market-determined exchange rate completely, remain responsive through adequate monetary policy adjustment, particularly to core inflation, and bring four more state-owned enterprises in line with the financing and governance template of the newly approved SOE law.
Addressing the postponement of the new international bond, Dr Akhtar cited high interest rates and costly market conditions as key factors.
“I have decided to postpone the new (international) bond. It is going to be expensive. Interest rates are very high. So, we cannot go to the international market,” she said, adding that the government would repay the $1bn bond that would be maturing in April next year.
She said the government was working on some other avenues. In her view, the staff-level agreement would enable approvals of $1bn in loans from the World Bank ($350m), the Asian Development Bank ($350m) and the Asian Infrastructure Investment Bank ($250m).
Dr Akhtar also emphasized the need for long-standing reforms to increase exports and domestic resources, indicating that the country will not survive without them.