Pakistan launched long term bonds to test its growing economic worth in the international capital market, which proved very successful as foreign investors gave overwhelming response by investing 800 million dollars in the bonds.
"We want to diversify our economy, as we have the capacity to raise funds from international capital market and we are developing long term relationship with the global investors", said Chairman Debt Management and Advisor to Ministry of Finance, Dr Ashfaque Hasan Khan while talking to APP here on Thursday. "By floating bonds we have demonstrated our ability to raise funds from international capital market", he added.
He said, as we always claim that Pakistan's economy is growing, debt burden is declining, tax collection is improving and imports and exports are increasing, "we want to show this position before the world through lending of these bonds. We went to international market to prove validation of our claims".
He said, the bonds were launched to test our claim because we want to appear on radar screen of the world economy drawing the attention of the global institutions towards consolidating Pakistan economy.
The launching of bonds, he said, will attract foreign direct investment (FDI) and enhance the portfolio investment which has already reached two billion dollars mark during first eight months of the current financial year as compared to 680 million dollars realised during last year ie 2004-05.
Dr Ashfaque said, the country has attracted investment in telecom, power, oil and gas, banking, chemical, food, cement, construction and trade sectors.
He said, the launching of bonds was also aimed at to improve self-discipline as 200 institutions were watching our activities every day. If the situation did not prove our claim, then a negative impact may be created on the economy.
He said Pakistan had earlier floated two bonds in the international market including Euro Bond in 2003 and the Islamic Bond commonly known as 'Sakuk' in January 2005.
"This is the third bond, he said and added we had floated the first two bonds under the required international regulations which allow every sovereign state to float bond in Asia, Europe and Middle East. The present bond was floated under the same regulations 144-A, which allow sovereign states to float bond in US as well as in Asia, Europe and Middle East, he added.
He said, Pakistan floated a 10 years and 30 years bond on March 23 in New York. The total size of the book was two billion dollars with 1.3 billion dollars for 10 years paper and 700 million dollars for 30 year paper, he said and added, Pakistan however decided to accept only 800 million dollars out of total subscription of two billion dollars.
An amount of 500 million dollars was accepted for 10 years bond and 300 million dollars for 30 years bond.
Dr Ashfaque said, the recent floating of bond was a major success as it gained the confidence of global investors on Pakistan's economic prospects and reforms progress.
He said the global investors taking 30 years risk on Pakistan's bond is the testimony of continuously improving economic fundamentals of Pakistan and increased investors' confidence.
The government will continue this practice of launching bonds every year to prove the confidence of foreign investors in growing economy of Pakistan, D. Ashfaque added.
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