Finance Minister Ishaq Dar said, “we still have an appetite for the sovereign bond, but the question is pricing. The price has improved and we are considering the issue, however, we are not interested in exchangeable bonds.”
Ishaq Dar attended a meeting of South Asian Association for Regional Cooperation (SAARC) finance ministers in Madrid on May 4, according to a message received here on Monday. He is in Madrid to attend the 41st Annual Meeting of the Asian Development Bank (ADB) from May 3 to 6.
The meeting was held on the sidelines of the ADB annual meeting. Earlier, two meetings were held in India in 2006 and Japan in 2007. The finance minister spoke in the forum about the current price shocks being faced by developing countries in general and the South Asian countries in particular.
He stated that the achievements made by developing countries for Millennium Development Goals (MDG) so far, may be eroded due to the increase in food and oil prices. He proposed that SAARC should discuss the issue in its forum to find out solutions. On Pakistan’s intervention, the SAARC forum was moved to consider the proposal, which was approved to become part of the agenda of the next SAARC finance ministers’ meeting.
Heads of the Nordic Investment Bank (NIB) and European Investment Bank (EIB) also held separate meetings with Ishaq Dar. NIB showed interest in providing financial support in the power sector. The Finance Minister welcomed NIB’s offer and invited them to finance hydel projects. To facilitate their investment, a financing framework agreement will be concluded between NIB and Pakistan.
EIB, which is a European Union investment institution, also stated that they are looking forward to the possibilities of financing viable public and private sector projects of infrastructure, industry, agro-industry, mining and services in Pakistan. They expressed their keenness for partnerships with other multilateral development banks, especially ADB, as co-financier in joint venture projects, with focus on electricity generation projects.
The Finance Minister asked EIB to finance hydel projects, especially Basha Dam in a consortium with other banks and financial institutions. He also asked the bank to help Pakistan in energy management, such as energy conservation and efficiency.
David T Beers of Standard and Poors, Credit Rating Agency also met Senator Ishaq Dar and discussed the macro-economic situation in the country, especially imbalances caused by food and oil prices. Finance Minister apprised the Credit Rating Agency that the government is making all the efforts to streamline the economy.
The next finance bill will definitely focus more on revenue generation, targeting subsidies for the poor and bringing central bank borrowing in its place. We are focusing on a credible database, with special stress on agriculture and manufacturing sectors. Credit will be made available to these sectors not to subsidise them, but for efficient management of these sectors. For agency, we are preparing an energy plan, but we need infrastructure support. He stated that our budget was doubly hit, one by increase in prices and the other by price adjustments. The subsidies were not budgeted properly in the past.
A team of HSBC also met the Finance Minister and discussed the operations of HSBC in Pakistan and the possibility of HSBC’s participation in the government bond issue. Governor State Bank, Dr Shamshad Akhtar also joined the meeting. The Finance Minister appreciated the keenness of HSBC for future government issues and their operation in the banking sector in Pakistan.
He stated that the new government is making a policy review to avoid pressure on foreign exchange reserves in the future. We are keen in medium to long term gains instead of short term benefits. The HSBC team showed enthusiasm in expansion of their operations in Pakistan. Governor State Bank stated that HSBC should also come into the SME sector.