KARACHI: With an aim to generate $500 million to $1 billion worth of financing, Pakistan’s federal cabinet on Thursday agreed to float the first Panda Bonds in the Chinese market within the next three months.
“This will be the first time in the history of Pakistan that the country will enter the Chinese market,” Information Minister Fawad Chaudhry said while addressing a news conference in Islamabad after the meeting.
Talking to Arab News, Dr. Khaqan Hassan Najeeb, Spokesperson of the Ministry of Finance said: “The size, tenure, and pricing of the bonds will be determined on the basis of the market response at the time of their issuance.” He also maintained that the government was hoping to have several rounds of issuance.
Faced with financial shortages to fill an external payments gap, the government has adopted a multi-pronged approach to address its financing needs and build foreign exchange reserves, officials from the finance ministry said.
“The idea of issuing these bonds is a well thought out decision since it was taken after discussions with the Chinese banks, investment groups, and regulatory agencies,” Dr. Najeeb added.
“The bonds will also help the government diversify the investor base of the capital market issuance and provide a source for raising Renminbi,” he said, adding that the “process will start in the next two to three months”.
Pakistan expects a good response from Chinese investors, considering the interest of various Chinese banks and investment groups in the proposal. “It will be interesting to see how much our finance division manages to generate after an open bidding process, and how it determines the exact size, tenor, and price on the basis of the market response at the time of issuing these bonds,” Dr. Ikram ul Haq, an expert on economic and taxation issues, said.
At this stage, Islamabad plans to float the bonds in three phases, with a target of $500 million to $1 billion in the first year. The process is expected to continue for at least three years, targeting up to $2 billion.
Pakistan is currently negotiating with friendly countries, international donors, and lending agencies, including the International Monetary Fund (IMF), to meet its financial requirements. According to Finance Minister Asad Umar, Pakistan wants to avoid the IMF since it is likely to set tough conditions ahead of the deal.
However, experts believe that the country is trying to explore the option of Panda Bonds after it found it difficult to secure a package from the IMF, in addition to substantial support, grant, and loans from China too. It is pertinent to note that Sri Lanka, the Philippines, the UAE, Hungry, and Poland have successfully issued such bonds in the past.
“For Pakistan, it will be a temporary relief on the balance-of-payments front, though it will further increase our already unsustainable foreign debt. The funding trade deficit with China through Panda Bonds will not solve our fundamental problem of building an economy that gets rid of imports even for exports,” Dr. Haq said.
He continued that there were not too many short-term quick fixes for Pakistan anymore. “We need to go for fundamental and structural reforms and then seek support from the IMF, Asian Development Bank (ADB), and World Bank (WB),” he added.
Pakistan to float first Panda Bonds in Chinese market
Pakistan to float first Panda Bonds in Chinese market
- To launch initiative within the next three months
- Experts believe move will provide temporary economic relief to the country
Pakistan to sell excess gas in international markets from Jan.1— petroleum minister
- Pakistan was reportedly exploring ways to reduce $378 million in annual losses from supply glut caused by excess fuel imports
- Move to sell excess LNG in international markets will limit $3.56 billion losses caused since 2018-19, says petroleum minister
ISLAMABAD: Pakistan will sell its excess liquefied natural gas (LNG) in international markets from Jan. 1, Petroleum Minister Ali Pervaiz Malik said, revealing the move would limit losses caused from a years-long supply glut.
Local and international media outlets had reported in July that Pakistan was exploring ways to sell excess LNG cargoes amid a gas supply glut that government officials said was costing domestic producers $378 million in annual losses. News reports had said Pakistan had at least three LNG cargoes in excess that it imported from Qatar and has no immediate use for.
Speaking to reporters during a press conference on Sunday, Malik said there was an excess of imported gas in Pakistan as the use of this fuel for power generation had reduced in the country during the past few months. He said Islamabad had been forced to sell the gas to local consumers, due to which the circular debt in the gas sector from 2018 till now had ballooned to around Rs1,000 billion [$3.56 billion].
“From Jan. 1 we will sell this excess fuel in international markets to reduce our burden and limit our losses of this Rs1,000 billion [$3.56 billion],” Malik said.
He said this move would also allow Pakistan’s state-owned enterprises in the sector to operate on their full capacity and generate profits and employment.
Malik also spoke of foreign oil companies that were ready to invest millions in the country in the near future.
The minister cited the recent visit of Turkish energy minister to Pakistan which had resulted in the state-owned Turkish Petroleum signing deals to carry out onshore and offshore drilling activities in Pakistan.
“Turkish Petroleum will also open its office in Islamabad, where 10 to 15 Turkish nationals will be working,” Malik said.
He also said that a delegation of the State Oil Company of Azerbaijan Republic (SOCAR) visit Pakistan this week, adding that it was also expected to collaborate with local companies for oil and gas exploration.
The minister said SOCAR was also opening its office in Pakistan.
“It will also invest millions of dollars in the construction of an oil pipeline from Machike to Thalian in collaboration with the PSO (Pakistan State Oil) and FWO (Frontier Works Organization),” Malik said.
