Finance Minister Muhammad Aurangzeb on Monday said that the country is preparing to launch yuan-denominated bonds (panda bonds) this year to shore up its finances, a Bloomberg report confirmed.
The country is planning to raise $200 million to $250m from Chinese investors over the next six to nine months, the finance minister told Bloomberg in an interview.
Panda bonds are a type of debt security issued by foreign entities in the Chinese capital markets, and they are denominated in Chinese yuan.
“The country is very keen, to tap the Panda bonds and the Chinese capital markets,” Muhammad Aurangzeb said according to the report. “We have been remiss as a country not to tap it previously.”
Speaking on the sidelines of the Asian Financial Forum in Hong Kong, Aurangzeb also confirmed that that the International Monetary Fund mission is scheduled to visit Pakistan next month, adding that it wanted the country to broaden its tax base and reach a tax-to-GDP ratio of 13.5 per cent, from 10pc in December.
“We are well on our way to achieve that target, not only because the IMF is saying that but because from my perspective the country needs to get into that benchmark to make our fiscal situation sustainable,” he said.
The IMF’s executive board approved a three-year, $7 billion aid package deal for the country in September to enable the country to “cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth”.
In July, global rating agency Fitch also upgraded Pakistan’s long-term foreign-currency issuer default rating (IDR) to CCC+ from CCC on the back of the country’s deal, while Standard and Poor maintained its rating of CCC+.
According to the report, Pakistan has undergone 25 loan programmes over half a century, with the IMF insisting the country institute “durable reforms in key areas of the energy sector, tax collection and state-owned enterprises to end a cycle of indebtedness”.
