ISLAMABAD - The ministry of finance is waiting for Prime Minister Imran Khan’s approval for issuing Sukuk and Euro bonds in the international market to generate $2-3 billion to build the foreign exchange reserves of the country.

“We are only waiting for Prime Minister’s approval for issuing the bonds,” said a top official of the ministry of finance. He further said that volume of these bonds depends on the market situation, whether the interest is high or low. We have roughly projected to receive at least two billion dollars, he added.

After getting approval from the Prime Minister, the government would give advertisements in newspapers for seeking participation in the bidding process for selection of financial advisers in next few weeks. The PTI-led government is also planning to launch investment bonds for overseas Pakistanis. The bond would be alike as the Central Directorate of National Savings (CDNS) launching dollar denominated bond for attracting investment from millions of overseas Pakistanis.

The PTI led coalition government is working on different options to build the foreign exchange reserves of the country, which are draining due to massive repayment of previous loans and financing of current account deficit. Pakistan’s foreign exchange reserves held by the State Bank of Pakistan have fallen to below $8 billion last week. “During the week ending 19th October 2018, SBP’s reserves decreased by US$264 million to US$7,825 million, due to external debt servicing and other official payments,” according to the SBP latest data.

The government had recently managed to receive $3 billion from Saudi Arabia, which would enhance the reserves held by the central bank to around $11 billion. The government had also already approached International Monetary Fund (IMF) for bailout package. Pakistan would also request China to deposit some amount in State Bank of Pakistan (SBP) account. 

Issuing Sukuk or Euro bonds in the international market is also part of the government measures to build the foreign exchange reserves. It is worth mentioning here that previous PML-N government had issued Euro and Sukuk bonds worth $7 billion during its five years tenure. It had also serviced $2.6 billion as bonds, which were issued during Musharraf’s era.

Meanwhile, Pakistan would have to repay $2 billion against bonds in next year. “An IMF program will not only bridge the financing gap but also serve as a strong signal to other official sector creditors that will be crucial to meet financing requirements over the coming years. This is particularly the case if a more front-loaded program provides greater market confidence when Pakistan’s upcoming Eurobond and Sukuk repayments totaling $1 billion each are due in April and December 2019, respectively,” the Moody’s noted.