AGL 40.00 Decreased By ▼ -0.16 (-0.4%)
AIRLINK 129.53 Decreased By ▼ -2.20 (-1.67%)
BOP 6.68 Decreased By ▼ -0.01 (-0.15%)
CNERGY 4.63 Increased By ▲ 0.16 (3.58%)
DCL 8.94 Increased By ▲ 0.12 (1.36%)
DFML 41.69 Increased By ▲ 1.08 (2.66%)
DGKC 83.77 Decreased By ▼ -0.31 (-0.37%)
FCCL 32.77 Increased By ▲ 0.43 (1.33%)
FFBL 75.47 Increased By ▲ 6.86 (10%)
FFL 11.47 Increased By ▲ 0.12 (1.06%)
HUBC 110.55 Decreased By ▼ -1.21 (-1.08%)
HUMNL 14.56 Increased By ▲ 0.25 (1.75%)
KEL 5.39 Increased By ▲ 0.17 (3.26%)
KOSM 8.40 Decreased By ▼ -0.58 (-6.46%)
MLCF 39.79 Increased By ▲ 0.36 (0.91%)
NBP 60.29 No Change ▼ 0.00 (0%)
OGDC 199.66 Increased By ▲ 4.72 (2.42%)
PAEL 26.65 Decreased By ▼ -0.04 (-0.15%)
PIBTL 7.66 Increased By ▲ 0.18 (2.41%)
PPL 157.92 Increased By ▲ 2.15 (1.38%)
PRL 26.73 Increased By ▲ 0.05 (0.19%)
PTC 18.46 Increased By ▲ 0.16 (0.87%)
SEARL 82.44 Decreased By ▼ -0.58 (-0.7%)
TELE 8.31 Increased By ▲ 0.08 (0.97%)
TOMCL 34.51 Decreased By ▼ -0.04 (-0.12%)
TPLP 9.06 Increased By ▲ 0.25 (2.84%)
TREET 17.47 Increased By ▲ 0.77 (4.61%)
TRG 61.32 Decreased By ▼ -1.13 (-1.81%)
UNITY 27.43 Decreased By ▼ -0.01 (-0.04%)
WTL 1.38 Increased By ▲ 0.10 (7.81%)
BR100 10,407 Increased By 220 (2.16%)
BR30 31,713 Increased By 377.1 (1.2%)
KSE100 97,328 Increased By 1781.9 (1.86%)
KSE30 30,192 Increased By 614.4 (2.08%)

ISLAMABAD: The federal government provided additional Rs 342 billion – 0.8 percent of GDP – sovereign guarantees to the Pubic Sector Enterprises (PSEs) during 2019-20, taking the quantum of total guarantees to Rs 2,399 billion in June 2020 from Rs 1,969 billion in June 2019, according to Finance Ministry Debt Coordination Office. Fresh/rollover guarantees have been issued in both domestic and foreign currency. The government issued highest guarantee of Rs 271 billion to Power Holding Private Limited (PHP) in fiscal year 2020 followed by Rs 33 billion to Pakistan International Airline Corporations (PIACL), Rs 20 billion to PAEC and Rs 18 billion to Water and Power Development Authority (WAPDA).

The government guarantees to stock extended to PSEs on June 2019 was Rs 1,969 billion with domestic currency accounting for Rs 1,464 billion and foreign currency Rs 505 billion which rose to Rs 2399 billion in June 2020 with the increase in domestic guarantees to Rs 1625 billion from Rs 1464 billion and foreign guarantees to Rs 713 billion from Rs 505 billion.

The government guarantees are generally extended to PSEs to improve financial viability of projects or activities undertaken by government entities with significant social and economic benefits and allows them to borrow money at lower costs or on more favorable terms and in some cases allows them to fulfill the requirement where sovereign guarantee is a precondition for concessional loans from bilateral/multilateral agencies to sub sovereign borrowers.

According to Debt Office, the volume of new government guarantees issued during a financial year is limited under Fiscal Responsibility and Debt Limitation (FRDL) Act, which stipulates that the government cannot give guarantees aggregating to an amount exceeding 2 percent of the GDP in any financial year. The limit of 2 percent of the GDP is applicable on guarantees issued both in local and foreign currencies.

The Ministry also maintained that the second issue of Energy Sukuk for settlement of circular debt was issued through a competitive bidding process managed by the Pakistan Stock Exchange (PSX) and overseen by Securities and Exchange Commission of Pakistan (SECP). Despite its large size, Rs 200 billion, the issue was oversubscribed and the cost of borrowing was also reduced to 6-month KIBOR – 0.10% per annum compared to the cost of 6-month KIBOR + 0.80% per annum paid on a similar transaction executed last year. This has resulted in expanding the investor base and cost savings of Rs 18 billion over the 10-year life of the Sukuk.

This is the first ever debt transaction conducted through the stock exchange and has set the stage for future debt issuance by public and private sector entities in a similar manner, the Ministry added.

Comments

Comments are closed.