Pakistan’s finance team has marked a return to the global markets with a US$500?million Eurobond under its Global Medium?Term Note programme. Officials noted that the three?year note drew strong investor demand despite market uncertainty and set a fresh benchmark for the future, speaking volumes about the country’s resilience and its ability to regain the confidence of international investors. The bond carries a 6.95 per cent coupon and matures in April 2029.
Hours earlier, the State Bank received a US $2?billion deposit from Riyadh; Saudi Arabia has pledged an additional US$3?billion and extended its existing US$5?billion facility for three years. These inflows cushioned reserves after a US$1.426 billion Eurobond repayment earlier this month.
It goes without saying that managing external debt remains a balancing act. The Fiscal Responsibility and Debt Limitation Act already exists to strengthen the Debt Office and set a path toward reducing public debt to 60 per cent of GDP. However, even as recent IMF assessments project a gradual decline in debt levels (still above thresholds envisaged under the FRDL framework), they emphasise the need to phase out fuel subsidies, address contingent liabilities and broaden the tax base to ensure medium-term fiscal sustainability.
In Washington this week, Finance Minister Muhammad Aurangzeb said Pakistan expects around four per cent economic growth in the current fiscal year as it looks to international capital markets after a hiatus of several years. His engagements on the sidelines of the IMF-World Bank Spring Meetings, including meetings with Chinese officials and discussions around the panda bond, reflect an effort to diversify financing sources and widen the external support base.
Looking ahead, the question is simple: will these inflows translate into development? Debt must finance productivity in energy, irrigation, infrastructure and education rather than merely plugging fiscal holes. Pakistan has regained some breathing space. That space must now be used for reform, growth and relief for citizens still living with the aftershocks of inflation and austerity. *