ISLAMABAD – Pakistan’s de-facto finance minister refuted an InternationalMonetary Fund assessment that the country’s economy was deteriorating andsaid plans to issue dollar bonds or Chinese-currency bonds haven’t beenfirmed up.
The IMF in a statement this week said the South Asian nation’s economyfaces continual “erosion” and its widening external and fiscal imbalancesmean that “risks to Pakistan’s medium-term capacity to repay the fund haveincreased” since completion of a three-year $6.6 billion bailout programthat ended in Sept. 2016. Pakistan’s current-account deficit could reach4.8 percent of gross domestic product in the year ending June, the IMF said.
“Given the growth of our economy, this growth will solve lot of problems,”Miftah Ismail, an adviser to Prime Minister Shahid Khaqan Abbasi, said inan interview in the capital Islamabad late on Wednesday. The fiscal deficitwent up “last year we had lot of political upheaval — but we will bringdown to less than 5 percent. We’ll make sure, our current account deficitis under control, not more than 3 percent next year.”
While Pakistan’s economy is growing at its fastest rate in a decade — ataround 5 percent — on the back of China’s Belt and Road initiative, it hasalso come under strain in the past year. The nation’s current account andtrade deficits have widened as exports lag regional peers, whileforeign-exchange reserves have dropped 27 percent to $12.3 billion in thepast year. That has increased speculation that the government will have togo to the IMF for what would be its 13th bailout since 1988.
Pakistan’s government is looking to raise funds to ease that pressure aspolitical parties start campaigning for elections in July. The rulingparty, whose leaders face multiple legal and corruption charges, will beloath to go back to the IMF so soon after the last program ended as itwould indicate economic mismanagement.
“I don’t see us going back to the IMF — we are considering issuing a Pandabond which is sold in China,” said Ismail, who took over the ministryportfolio in December after Finance Minister Ishaq Dar, who faces arrest inPakistan on graft charges, sought medical treatment in London. “If themarket is favorable only then I’ll go to the market. If not, I’m not indesperate need for money.”
Pakistan last issued dollar debt in November, raising $2.5 billion. TheMuslim-majority nation of more than 200 million people is looking to tapthe markets before the national vote and hasn’t decided if it will issueconventional bonds or Islamic-compliant sukuk, Minister of State forFinance Rana Afzal Khan told Bloomberg last month.
“Unfortunately U.S. Treasury interest rates have gone up,” said Ismail.“We’re a very price sensitive issuer. We’ll issue bonds when the prices areright.”