Pakistan

Pakistan is selling a $2.5 billion dollar bond that will be a key test of investor sentiment after the resumption of a $6 billion bailout program with the International Monetary Fund, Bloomberg News reported. The South Asian nation is offering the notes in three parts, people familiar with the matter said, asking not to be identified because they’re not authorized to speak about it. The debt deal comes amid a flurry of developments in recent days, as Pakistan’s economy grapples with continued fallout from the pandemic.
Read more
Pakistan has hired banks for a possible foreign-currency bond offering, Bloomberg News reported. The government has mandated Deutsche Bank AG, JPMorgan Chase & Co., Credit Suisse Group AG, Standard Chartered Plc and Emirates NBD Bank PJSC. The South Asian nation is looking to raise funds after reaching an agreement with the International Monetary Fund on resumption of a $6 billion bailout program that was secured in 2019 to avoid bankruptcy. Pakistan is also separately planning to issue a $500 million green note in the next few months to help boost its development of hydroelectric power.
Read more

Pakistan plans to ask China for relief on payments for power projects Beijing financed over the past eight years, the latest developing nation that’s struggling to repay debt under President Xi Jinping’s Belt and Road Initiative, Bloomberg News reported. In informal talks, Pakistan and China have discussed easing terms on the repayment of debt on about a dozen power plants. The parties have canvassed Beijing’s willingness to stagger debt payments, as opposed to lowering equity returns.

Read more

The economic fallout from the Covid-19 crisis is likely to tip several of the world’s poorest countries into debt distress, forcing official creditors and private-sector lenders to accept a reduction or restructuring of loan repayments, the Paris Club group of creditor countries said on Tuesday, the Financial Times reported.

Read more

Moody’s has clashed with the UN after putting five countries on review for a downgrade in recent weeks, saying that a G20-backed debt suspension scheme poses risks to private creditors, the Financial Times reported. The rating agency took action against Ethiopia, Pakistan, Cameroon, Senegal and the Ivory Coast, after the countries opted into a G20-backed initiative that allows them to freeze official bilateral debt repayments due this year to member nations and members of the Paris Club, a group representing major credit countries.

Read more

Investors have warmed to Pakistan since the government secured a $6bn bailout from the IMF in July, removing any immediate threat of sovereign default, the Financial Times reported. MSCI’s Pakistan equities index is up more than a third from its August lows, compared with a gain of just over 10 per cent for MSCI’s flagship emerging market index. Foreign investors have made a tentative return to the country’s local debt market, buying $1.2bn of local currency government bonds since July after staying away for most of the past two years.

Read more

After a year of fending off an International Monetary Fund bailout, Pakistan’s Prime Minister Imran Khan wants to win one this week with a plan to jolt his economy into shape—potentially at the expense of the agenda that helped him get elected, The Wall Street Journal reported. The IMF board is due to meet Wednesday in Washington to consider whether Pakistan is undertaking enough tough action to get a loan of $6 billion over three years. Mr.

Read more

Pakistan’s central bank has increased interest rates, as expected, citing the need to contain inflation and a devaluation of the rupee, which has shed nearly 6 per cent in two months, the Financial Times reported. The State Bank of Pakistan on Monday raised its key policy rate 150 basis points to 12.25 per cent. The rupee has fallen about 5.9 per cent against the dollar since March. Analysts said the rate rise was made in line with Pakistan’s IMF commitments to secure a $6bn loan to stabilise the country’s weak economy.

Read more

Pakistan and IMF negotiators have reached an agreement on a $6bn loan for the country, the finance ministry said last night. Speaking on state-run Pakistan Television, Abdul Hafeez Shaikh, head of the finance ministry, said: “We have reached an agreement with the IMF staff for $6bn for the next three years. There will be adjustments involved but we will try to make certain that the extent of pain on low-income people is minimal.” The agreement is yet to be formally confirmed by the IMF’s management and its executive board, the Financial Times reported.

Read more

Pakistan’s finance minister resigned on Thursday following widespread criticism over the country’s economic crisis and his handling of a bailout deal with the IMF, the Financial Times reported. Asad Umar’s departure comes amid frustration from business leaders and opposition politicians with Islamabad’s decision last year to turn to countries including Saudi Arabia and China for at least $7.2bn in short-term loans instead of securing an IMF bailout package.

Read more