- Finance minister Shaukat Tarin says fund will be utilised for projects such as developing clean water and cleaning up the rural landscape
Pakistan plans to raise $1 billion through the issuance of an environmental, social, and governance (ESG) Eurobonds, said Finance Minister Shaukat Tarin during an interview with Bloomberg on Thursday.
The development comes after the country raised a similar amount through a Sukuk issuance last month, and also earned approval from the International Monetary Fund’s (IMF) Executive Board for the release of its next tranche. The IMF approval allows the authorities to draw the equivalent of SDR 750 million (about $1 billion) as well.
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Tarin, in his Bloomberg interview, said the country will pursue environmental development and support in tapping the international markets to raise dollars.
The note, the first of its kind for the Pakistan government, follows the first ‘green’ bond issuance by state-owned Water and Power Development Authority (WAPDA) in May last year. WAPDA raised $500 million from the international markets at 7.5%.
The South Asian nation would join Mexico and Kenya in exploring ESG bonds as issuance from emerging markets, stated Bloomberg.
Pakistan would use funds from the ESG bond for projects such as developing clean water and cleaning up the rural landscape, added Tarin.
The country’s financing requirements have increased as the trade deficit widens, driven also by a surge in global commodity prices and pursuit of higher economic growth. While the central bank has tightened its stance, higher oil prices have kept Pakistan’s economy on the backfoot.
This was the first issuance under the government’s newly established ‘Trust Certificate Issuance Programme’ and the first time that Government issued International Sukuk with a 7-year maturity.
“The transaction generated great interest as leading global investors from Asia, Middle East, Europe and the US participated in the order book,” said the Ministry of Finance in a statement then. “The transaction's success is a testimony to the investors’ confidence in the country’s economic revival and long-term stability and growth.”