On Thursday, Pakistan received five offers from Chinese companies to assist in raising money using Panda bonds.
Panda bonds are a kind of debt security that are issued in Chinese yuan (RMB) on the Chinese capital markets by overseas companies. Foreign issuers, such as multinational firms, foreign financial institutions, and sovereign governments, can obtain funding from Chinese investors using these bonds.
The article stated that by the time the deadline for proposals expired, the government had received three offers from law firms and two from credit rating organisations. Additionally, two local companies expressed interest in serving as the “domestic legal counsels for issuing the bonds.”
According to Bloomberg, the ministry of finance “was evaluating the proposals prior to making a final selection.”
Finance Minister Muhammad Aurangzeb had stated in March that the nation is eager to attract Chinese investors by offering up to $300 million in panda bonds this year for the first time ever.
According to the minister, Pakistan can expand its funding sources and attract investors from a new market by selling debt denominated in yuan during an interview with Bloomberg.
Read more: Gender Bond To Start Financing Women-Led Businesses By End July
The Associated Press of Pakistan (APP) cited him as stating, “It’s something we should have looked at quite frankly some time back.”
In order to help Pakistan “cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth,” the nation recently signed a $7 billion, three-year aid package deal with the International Monetary Fund (IMF). This agreement must be approved by the Fund’s Executive Board.
If the nation wished for the present IMF program to be the final one, Finance Minister Muhammad Aurangzeb stated that fundamental reforms could not be postponed any longer.
In order to make this the capital’s final program, the finance minister stated, “It is not just about getting the fund; it is about making sure that we do the structural reforms this time around.”
In order to stabilise the nation through reforms, Aurangzeb stated that “permanence” was required. He went on to say that changes in the areas of energy, taxes, and state-owned enterprises (SOEs) “had to move forward.”
He emphasised, “Because we do not have the space and we do not have the room to deviate from this agenda.”
The finance minister stated that in order for this to be the final Fund program, a “Road to Market” was also required with regard to capital markets.
“Moreover, export-led growth and foreign direct investment—which is necessary for export-led industries—are the only ways to get to market,” he stated, emphasising that they could not “borrow from the outside and create currency mismatches.”
“Therefore, any external borrowing must be directed towards projects that can generate foreign exchange for the nation,” he stated, adding that Pakistan also need “re-entry into the global capital markets.”
In order to diversify the funding basis going ahead, he said, equity and debt markets must be included.