Pakistan plans return to global bond market after four years

Pakistan plans to return to the global bond market after four years, underscoring its progress in economic stabilisation after coming close to a default just a few years ago, reports Bloomberg.

The South Asian nation will issue a proposal for advisers in the coming weeks, said Finance Minister Muhammad Aurangzeb. It’s still assessing whether to issue a dollar, euro or sukuk bond. The government is preparing its first-ever panda bond within weeks.

At the World Economic Forum in Davos, Pakistan’s delegation, led by Prime Minister Shehbaz Sharif, is pitching that the country’s economy is in a good place and ready for investments, particularly in minerals, agriculture and technology. Its ability to tap the fixed-income market is a key part of that.

“We have consolidated our gains in terms of macroeconomic stability” Aurangzeb said in an interview in Davos. “If you look at every key indicator — inflation, interest rates, the fiscal position and the current account — the direction of travel has clearly improved.”

Pakistan had basically been shut out of the bond market since 2022. But it adopted fiscally prudent measures as part of bailout programmes with the International Monetary Fund. Inflation, which peaked at about 40 percent, has fallen to single digits. The country has again posted a primary fiscal surplus, and has been upgraded by ratings companies.

Foreign-exchange reserves are expected to reach three months of import cover in the year ending June, a level seen as a global benchmark, Aurangzeb said.

He also sees no immediate pressure on the rupee, going by the real effective exchange rate — and pointed to a healthier balance of payments, strong remittance inflows and growth in services exports. The rupee has been stable for almost 18 months.