This is with reference to the editorial in Business Recorder, "More heavy borrowings on the cards" published on 6th March. Certain clarifications in regard to this editorial are given below by Finance Division's Debt Policy Co-ordination Office:
"The item quotes incorrect rates for Pakistan's Euro/Sukuk bonds as high as 8.5% for 10 years Eurobond and 6.5% for Sukuk. In fact, the 10 years bond was issued at 8.25% and the recent Sukuk of US$ 1 billion was at a historic low rate of 5.5% which was better than recent sovereign issuance of bonds by both Bahrain and Sri Lanka, having credit ratings higher that Pakistan.
"The article has mentioned that exports have been steadily declining and the trade gap widening regardless of the export incentive package while remittances are also declining. In this regard, as far as the issue of falling exports is concerned, one of the reasons is weak external demand of major trading partners, like China and EU as well as slow-down of global trade. The present government has taken a number of initiatives for the promotion and facilitation of exports, eg export-Import Bank, also known as EXIM Bank has been established, mark-up rates have been reduced on export Re-finance Facility and Long Term finance Facility. To operationalize the trade policy, a total of Rs 6.0 billion has been allocated in the budget. Government has also unveiled the Strategic Trade Policy Framework (STPF 2015-18) to promote regional trade and focus on product sophistication and diversification, market access, institutional development and trade facilitation.
"Prime Minister has announced export package incentive of Rs 180 billion for export promotion that envisages abolition of customs duty and sales tax on import of cotton, textile machinery and man - made fiber to enhance exports. It is estimated that the package would enhance the country's exports by $2.5 to $3.0 billion by the end of June 2018. Moreover, present government's initiative for the promotion and facilitation of exports resulted in growth of 4.6 percent in January 2017 over January 2016.
On the investment front, FDI has been more than doubled and the CPEC program will further attract foreign direct investment going forward. The biggest investment coming into Pakistan is through the China Pakistan Economic Corridor in the area of electricity generation & transmission projects, infrastructure projects including motorways, railways, ports, airports, Gwadar projects and Cross Border Optical Fiber Cable. In addition, with the establishment of special economic zones (SEs) planned under the CPEC, foreign investments are expected to improve further.
Remittances remained as one of the main factor in the stability of external account. It continued its upward growth trajectory since 2013. During FY-2016 the remittances reached US$ 19.9 billion during July-January FY-2017, remittances declined by 1.87% on account of slow economic activities in GCC and Saudi Arabia from where the country receive maximum remittances. Whereas, remittances witnessed a positive growth of 1.46% in January 2017 over January 2016 on YoY. However, given that development activities under Saudi Arabia's vision 2030 which provides a roadmap for Kingdom's development and economy for next 15 years, FIFA World Cup 2022 in Qatar and Expo 2020 in Dubai will create more labour demand for which export of man power will help in inflows. Moreover, formal channels for the remittances transfer through banks by expanding their network with leading money transfer operators are also in place."
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