- Raising $2.5 billion in road shows a dubious achievement
Hardly had the federal cabinet given the green light to float $3 billion foreign bonds, when the official oversight team swung into action, staging road shows abroad, in conjunction with leading foreign financial institutions, and in the blinking of an eye, successfully enhanced Pakistan’s already frightening foreign debt by $2.5 billion. The five years maturity Sukuk bonds and ten years Eurobonds raised $1 billion and $1.5 billion at a relatively reasonable 5.625 and 6.875 percent respectively. The only positives, if such they can be termed, in this largest ever single such transaction (so far), is persisting investor confidence despite the country’s mounting political and economic woes, as the total offered bids were $8 billion, and that it affords momentary breathing space to the hard-pressed rupee by shoring up hugely depleted forex reserves. But the event is hardly a cause for joyous celebration, as the underlying factors that drive our leaders along this perilous path remain unchanged, and indeed will go from worse to irreversible, without a miracle happening soon. And the gloomy alternative remains that hard taskmaster, the IMF.
The bleak black holes of the economy which suck in all economic initiative or growth, and which remain callously ignored in government policies, are as always, an almost pathological widespread aversion to tax payment, dismal level of forex reserves for a $304 billion economy, a measly $19.7 billion on November 27, 2017 (contentiously including private deposits of $6.169 held by commercial banks), sinking exports and record imports, untenable, almost suicidally widening current account deficit, shy foreign direct investment, as well as unbridled wasteful and luxurious government spending that adds to the volcanic mountain of our national debt. During July-September 2016, debt-servicing alone accounted for Rs4.45 billion or 54 percent of the total government revenues of Rs824.5 billion. An upright, experienced, austere and uncontroversial finance minister, with out-of-the- box thinking habits, is urgently needed to avert to avert sinking deeper in the vicious cycle of fresh borrowing to settle old loans, as happened in the 10 year 2007 Eurobonds issue, to repay which the government was forced to borrow $1billion from China in June 2017.