$1 billion may be raised with bond issue: foreign banks'''' advice to government

International banks and financial institutions have informed government economic managers that Pakistan can raise $800 million to $1 billion from the global market by issuing sovereign bond to plug the current account deficit.
Government officials are engaged in communication with representatives of international banks and financial institutions for the last three weeks. They want to consult them on the international market hunger for bonds before issuing the sovereign bond.
Talking to Business Recorder on Monday a senior official, part of the economic team engaged in consultations, said: "We have received very encouraging response from the international banks and financial institutions'''' representatives for going into the international market for yet another sovereign bond before the closing of the current fiscal year."
After conceiving the idea of plugging the current account deficit by capping money from the sovereign bond, the government had invited officials of 12 international banks and financial institutions.
These included ABN Amro Bank, Citi Bank, American Express Bank, Grindlay''''s Bank, Deutsche Bank and Standard Chartered Bank. The government plans to select more than one bank from the short-listed ones to act as lead manager for the bond issue. Since the government is facing huge current account deficit this year, it is looking for various options to plug the gap. The bond is an easy way to get some portion of the required money.
The government has already secured from the international market $813 million through OGDC''''s global depository receipts (GDRs) and another $200 million through MCB''''s shares, but it still needs at least $1 billion from other than traditional sources to plug the gap for the current fiscal year.
Government officials are, however, giving the impression that they want to float the bond before the closing of the current fiscal year to stay in the world market. But the factual situation demands such move to keep the ball rolling for the economic managers of the government who are making desperate efforts to keep the current account deficit at an acceptable level.