ISLAMABAD - The poor response by the global markets to the euro bond offered by Pakistan shows that unfortunately the global investors remain unconvinced of the improved economy narrative, PTI MNA Asad Umar said yesterday.
Asad Umar, the head of PTI marketing, media and policy, in a statement said that this was also consistent with the extremely low level of foreign direct investment (FDI) being received by the country which is also a vote of no-confidence by the global investors in the economic policies of the current government. FDI which had peaked at more than 5 billion dollars a few years back was less than 1 billion dollars in 2014-15.
"The government in its latest offering last week was only able to sell 500 million dollars at a yield of 8.25 percent which is the same pricing it got last year when Pakistan had re-entered the international bond market after several years gap," Asad Umar said.
The poor response of the global bond market to the Pakistan bond issuance is the same that the international firms continue to shun Pakistan as an investment destination. They see no fundamental economic reform taking place, he said.
He said that the current account continues to run in deficit despite the record plunge in oil prices, which is the single biggest import of Pakistan. Exports continue to decline and the drop in exports is starting to reach alarming proportions. As mentioned earlier, the foreign investment continues at record low levels and domestic private sector investment and credit off take continues to be anaemic, he said.
The scandalous LNG import fiasco has reached a point where the regulator (OGRA) has declared that the imports so far are without lawful authority. Senior executives are being pressurized to resign for refusing to follow illegal orders. Pakistani consumers have been laden with record high indirect taxation and withholding taxes.
"Reserves built up entirely on borrowings cannot provide the foundation for sustainable growth and shared prosperity, especially if the borrowing is being done at exorbitantly high levels of interest cost," Umra said.