Pakistan needs IMF bailout, make ‘tough political choices’ — Habib Bank CEO

Residents watch Pakistani Prime Minister Imran’s televised address after his visit to Saudi Arabia last month, where he received a $6 billion rescue package. (AFP)
Updated 06 November 2018
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Pakistan needs IMF bailout, make ‘tough political choices’ — Habib Bank CEO

BEIJING: Pakistan needs to seek a bailout from the International Monetary Fund (IMF) and make “hard decisions” to avoid going back again, said Muhammad Aurangzeb, chief executive officer of Habib Bank, the country’s biggest lender.
The bank is also urging Pakistan to tap China’s nascent “panda bond” market, which enables oversees issuers to raise yuan-denominated bonds there, as soon as possible after IMF funding is secured.
“They are clearly very interested, because the overall stance the current government has is to move and diversify away from USD into RMB,” Aurangzeb told Reuters in an interview in Beijing on Tuesday.
The potential size of panda bond issuance would be equivalent to $1.5 billion to $2 billion, he said. China Development Bank and China International Capital Corp. would be HBL’s domestic partners on such a project.
Habib Bank received an RMB license from Beijing two weeks ago and is seeking approval to upgrade its representative office in the Chinese capital to a branch as soon as next year, he added.
An IMF rescue package would be Pakistan’s 13th from the multilateral lender since the late 1980s.
“The advantage of a program which IMF brings to the table is that it pushes the government to bring in their fiscal discipline and move with the reform agenda,” Aurangzeb said.
Last month, Pakistan received a $6-billion rescue package from Saudi Arabia, but officials say it still plans to seek a bailout from the IMF to avert a balance of payments crisis.
Pakistan’s foreign reserves have plunged 42 percent since the start of the year to about $8 billion, or less than two months of import cover.
“Both on the fiscal side and on the current account side, some very tough political choices need to be made,” said Aurangzeb.
These include moves to increase the tax base, boost exports — particularly to neighboring China, let the currency find its fair market value, actively work to narrow deficits, and get the structural reforms agenda going, he said.
“If they can do that, they can get on a more sustainable path without relying on the IMF,” Aurangzeb said. “But if they don’t follow through, the likelihood is that there will be another (IMF) program.”
The focus of new Pakistani Prime Minister Imran Khan’s talks with Beijing is less about debt or loans, and more about increasing investment, industrial activity, exports to China, and the creation of local jobs, Aurangzeb said.
Khan began a visit to China late last week.
Though China is Pakistan’s closest ally, Khan has sought to rethink a signature project, the $60-billion China-Pakistan Economic Corridor, a flagship of Beijing’s vast Belt and Road Initiative.


First IT-related company starts trading in Saudi bourse

Updated 8 min 35 sec ago
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First IT-related company starts trading in Saudi bourse

DUBAI: Shares of Al-Moammar Information Systems Company started trading at the Saudi Stock Exchange (Tadawul) on Wednesday, the first IT-related entity in the bourse’s roster of 201 listed companies.

Al-Moammar Information Systems Company has been assigned a trading symbol of 7200. The trading symbol is used by investors and traders to transact orders.

Shares were up 3.2 percent to 48.2 riyals in late trade, with 1,038,877 counters changing hands.

The company held a five-day public offering last March and opened for subscription 4.8 million ordinary shares, at an offer price of 45 Saudi riyals per share, representing 30 percent of its paid-up capital.

Saudi Fransi Capital was assigned as financial advisor, lead manager, bookrunner and underwriter of the offering, while Riyad Bank, Saudi British Bank and Banque Saudi Fransi were tasked as receiving agents.