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Govt censured for issuing $500 million Eurobond

Govt censured for issuing $500 million Eurobond

LAHORE: All Pakistan Business Forum (APBF) has criticised the government for issuing $500 million Eurobond, saying the high mark-up rate would further plunge the country in expensive debt.

APBF President Ibrahim Qureshi, in a statement, said that the government has acquired a loan of about $3.5 billion by launching Eurobonds at excessive mark-up rate of 8.25 on average in just two years.

Qureshi said that the recent move was surprising since the very same government sold $2 billion Eurobonds and Sukuks at 8% and 7% mark-up, respectively, last year, implying the economic managers have acquired loan at more than 2% higher mark-up.

He said that the government has been exploring possibilities of financing its deficit from multiple sources including IMF, World Bank, domestic borrowing and now it has found the easiest, yet extremely expensive solution of all, Eurobonds.

The extremely low level of foreign direct investment of just $1 billion against $5 billion a few years ago implies that foreign investors are not satisfied with the economic policies of the current government. The APBF president said the government entered into a long-term commitment for short-term relief, which is short-sighted. He said that international loans are more expensive than domestic ones but government was piling up international loans, tilting its loan portfolio towards expensive sources of funds and its implications will be felt in the future.