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Govt to Raise $1.5 Billion by Issuing Sukuk Bonds In October

Pakistan plans to raise as much as $1.5 billion by issuing international Islamic bonds in October, a national daily reported.

A Pakistan Tehreek-e-Insaaf official said that “preparations are underway for launching fresh Islamic Sukuk bond to generate $1 to $1.5 billion within next one and half month period”.

The government intends to float a $1 to $1.5 billion bond by end of October or early November, and then issue additional bonds worth $1 billion to $1.5 billion in the second half of FY 2022.

The report stated that the government will pledge asset-backed guarantees in the form of the Lahore and Islamabad international airports, as well as some parts of the motorway. This will take place after the government pays back $1 billion as the principal amount of a Sukuk bond on 13 October 2021 on the completion of its five-year maturity.

The Ministry of Finance has already secured No Objection Certificates (NOCs) from the Ministries of Aviation and Communications. Similarly, the federal Cabinet and the Ministry of Law have approved the issuing of international bonds over the next 12 months.

The government also plans to issue domestic Sukuk bonds over the next few months.

Governments tend to issue bonds to finance deficits and to pay for projects or day-to-day spending. Pakistan’s current account deficit expanded to $1.48 billion in August, on the back of a high import bill, while external debt repayment is estimated to be around $14.7 billion in FY 2022.

The government will present its recent revenue performance in upcoming talks with the International Monetary Fund starting 29 September and is expected to ask for additional funding.

courtesy: propakistani

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