DUBAI (Reuters) - Pakistan is considering issues of Islamic bonds and Eurobonds, while the International Monetary Fund believes the country’s economy remains at risk despite some progress, its finance minister said on Thursday.
Pakistan could tap debt markets as early as the first or second quarter of 2010 with one or more issues, the minister told Reuters in an interview in the United Arab Emirates.
“It could be both or either, because we are looking at both opportunities. Anything less than half a billion dollars would not be worth our while. My own sense is anything between half a billion dollars to $1 billion should be right,” Shaukat Tarin said.
He said the ministry should decide on the debt issuance by the end of 2009.
Tarin, in Dubai for a round of talks with IMF officials which he said were “successful”, said the international lender expressed concern about Pakistan’s security situation and its impact on economic performance.
“The press release is going to say that obviously there are risks in the country and in the economy but progress has been made by the government of Pakistan in the economy,” he said.
”Our recovery, our stabilisation programme is pretty robust, I think they are very comfortable with whatever we are doing.
“The IMF obviously wants that we focus on tax reforms, they would also want the ”Friends of Pakistan“ to give aid which has been promised to Pakistan on time, that is of course a concern to the IMF,” he said.
The Friends of Pakistan, set up in September 2008, wants to marshal political and economic support to promote stability, which is key to security in the region.
Pakistan was promised $5.7 billion in aid over two years at a donors conference in Japan this year but only a fraction of those funds has arrived.
Pakistan has a wishlist of projects worth $30 billion it wants to see implemented over the next 10 years, including hydroelectric dams, roads and projects aimed at improving security in its violence-plagued northwest on the Afghan border.
The Friends group includes Australia, Britain, Canada, China, France, Germany, Italy, Japan, Saudi Arabia, Turkey, the United Arab Emirates, the United States, the United Nations and European Union.
Donors want to see Pakistan follow through on reforms to get its economy back on track, including improving revenue collection, cutting subsidies and expanding export industries.
Meanwhile, an energy shortage is undermining growth and is a big burden on public finances. The IMF wants to see higher power prices to improve the power industry’s finances.
On Wednesday, Pakistan’s central bank governor told Reuters that the government should meet its fiscal deficit target in the first six months of the 2009/10 fiscal year despite a slippage in the first quarter.
The country, whose fiscal year runs from July to June, has pledged to keep its fiscal deficit at 4.9 percent of gross domestic product in the 2009/10 fiscal year under an aid deal with the IMF.
“The (first quarter) slippage was 0.2 percent, so instead of 1.3 percent of GDP, we were 1.5, but we are sticking to the fiscal deficit (target) because we believe that the fiscal slippage was self correcting,” Tarin said on Thursday.
Writing by John Irish; Editing by Mike Peacock