Faced with a difficult situation of squeeze in foreign inflows from donors due to the poor economic performance and the rising infrastructure demand to revive the slowing down economic activity, President Asif Ali Zardari on Friday directed the government’s finance team to look into floating infrastructure bonds and finalise currency swap with friendly countries.
Zardari held a meeting with the finance team to take stock of the overall financial and economic situation of the country.
An official source said the government was facing difficulties in financing the mega infrastructure projects in the power, energy and communications sectors like Diamer Bhasha Dam, gas pipeline projects and the National Trade Corridor.
The government planned floating a development financial institution, infrastructure bank during the last fiscal year to provide the much-required financing for the projects in the public sector. However, the plan was delayed for the International Monetary Fund (IMF) opposed the idea as excessive expenditure by the public sector was likely to push up the inflation. Now with slim chances of financial assistance from the international financial institutions and friendly countries, the government is left with no options but to generate resources itself for the planned projects, the source added.
“The government needs urgent financing – $11 billion for Diamer Bhasha Dam, $1.2 billion for Iran-Pakistan gas pipeline, $500 million to lay a pipeline for liquefied natural gas (LNG) transmission from Karachi to Lahore. Billions of dollars are required to utilise the Gwadar deep-sea port. The Central Asian states and Afghanistan want to use Pakistani ports for their trade, but without improvement in infrastructure the dream could not be realised,” the source said.
Since Pakistan is likely to face a financial crunch after beginning of the repayment of IMF loan worth $ 8 billion from the next year, the currency swap with China, Turkey and Sri Lanka is under serious consideration, but it requires careful planning and execution due to international implications, the source said, adding there were even serious concerns in the official and business circles. China and Turkey are interested in the scheme, he added.
Presidential Spokesman Farhatullah Babar told reporters the meeting discussed floating of infrastructure bonds, the proposed currency swap agreements with Turkey and Sri Lanka and measures to increase remittances through incentives to the Pakistanis working abroad.
The president, he said, directed the finance team to consider the feasibility of floating infrastructure bonds to raise equity for building infrastructure projects.
