Islamabad: Pakistan is looking at expatriates and wealthy Chinese investors to avoid a foreign exchange crisis. Islamabad has been battling to restore its dwindling stocks of foreign currency and hopes to avoid asking for help from the International Monetary Fund through measures including raising US denominated debt from Pakistanis living abroad and a Renminbi-denominated “Panda Bond”.
The plans come after a fall in Pakistan’s foreign reserves this month to about $11.4bn - equivalent to about 10 weeks of imports - down from around $14.1bn in December. Reserves have been squeezed by a combination of falling remittances from Pakistani migrant workers abroad and rising imports and payments to Chinese companies for infrastructure as part of an ambitious, $60bn China-Pakistan Economic Corridor.
The World Bank warned in October that Pakistan would need to raise $17bn to cover its debt repayments and the current account deficit this year. We have never issued a Panda Bond before, but I am interested in doing so. We are just looking at the rules and requirements. Islamabad argues that affluent Pakistanis abroad can be enticed to support their country, especially if it offers remunerative rates.
“Our expatriates will be offered attractive rates, better than what they will receive elsewhere,” a central bank official said. He said the country would seek to raise up to $1bn from expatriates worldwide, although he declined to reveal the terms of the offer. Mushtaq Khan, a former chief economic adviser of the central bank, said tapping overseas Pakistanis was a promising idea that could help the country ride out its current woes.
