KARACHI/ISLAMABAD: Finance Minister Ishaq Dar Wednesday assured the investors that Pakistan won’t default, adding that the country has a secure future with resilient economy so there is no chance of default.
The Finance Minister said this while virtually addressing a ceremony to mark the first listing of the Developmental Real Estate Investment Trust (REIT) on the Pakistan Stock Exchange (PSX).
The Finance Minister also assured investors that the government will complete the IMF program.
He admitted that the country’s economy was facing very critical position, but the government is making all-out efforts to improve the situation. He pointed out that there are three primary reasons behind the worsening situation and these are smuggling of US dollars to a neighboring country coupled with subsidization and smuggling of wheat and fertilizer.
Dar said the government had directed the law enforcement agencies to ensure that the smuggling of all three items is stopped.
The Finance Minister was optimistic about the improvement in the economic situation soon. He said the rumors of default are being spread by the people who brought the country to this point. He said he can prove and will prove that Pakistan will not default.
He said Pakistan’s debt-to-GDP ratio is currently at 72 percent. He noted that debt-to-GDP of United States of America is 110 percent, Japan’s 257 percent and the UK 101 percent. He said debt-to-GDP ratio of dozens of developed country is over 100 percent. “Unfortunately, we are our own enemy,” he added.
The finance minister agreed that the policy rate at 16 percent in Pakistan is high. He gave example of Turkey and said inflation was over 60 percent but the policy rate was at 9 percent. However, he said that the State Bank of Pakistan and its Monetary Policy Committee are autonomous and to keep policy rate at this level is their decision.
Dar said the PML-N government had completed the IMF program in 2016. Despite all difficulties and challenges, the present government will complete the ongoing IMF program, he added. According to Dar, the government has taken some policy measures to improve the economic situation of the country. He said current account balance has improved and efforts are being made to decrease inflation and trade deficit. He reiterated that everything is under control and there is no chance of default.
The finance minister said he is happy to note that the REIT structure guarantees full documentation of real estate development, ensuring transparency. “PML-N has always been a promoter of the capital market in Pakistan and we are working towards steering Pakistan out of this challenging phase,” he added.
“The market will see the results of our efforts which we are certain will reflect too, creating space for new products and sectors,” he said and congratulated Arif Habib Group on being pioneers of REITs and the listing of Global Residency REIT.
Dar maintained that the country would be in a much better position by the close of fiscal year in terms of external account and foreign exchange reserves.
He said that Pakistan’s economy was being predicted 18th economy by 2030 but there is a need to reflect and retrospect as to what went wrong that the country is looking for every dollar today.
He said there was rhetoric that Pakistan would not make payment of Sukuk Bond but payment was made on time. He said stock market’s role is very important and everyone has to play its role for taking the country towards development.
He said when he visited Washington in October, many people appreciated him for not going to Paris Club and making bond payment in time. He said Pakistan will benefit from these decisions in the long term.
He said on import, after discussion, the governor SBP has re-prioritised and circular was issued by the SBP with first priority to essentials followed by energy-related imports, imports for export-oriented industry and fourth priority is to the agriculture, import on deferred payment is on number five. Securities and Exchange Commission of Pakistan (SECP) Chairman Akif Saeed said Global Residency REIT, is the first developmental REIT to be listed on the PSX and its listing demonstrates the potential of REITs in Pakistan, the promotion of which we have been working on for the past 15 years is now garnering results.
Dr. Shamshad Akhtar, Chairperson PSX and former governor State Bank of Pakistan, appreciated Arif Habib Group’s efforts to bring new products to the market and play its due role both in the financial and real economic segments. She emphasized the importance of structured and transparent corporate governance framework, which brings efficiencies to the business.
She said real estate is a primary industry that can bring vitality to a large segment of economy. “In addition to economic aspects, we should also be mindful of the environmental impact of our practices”, she said and expressed confidence that REITs could not only invigorate the capital markets but can also bring best operational strategies in the real estate development business. Arif Habib, Chairman, Arif Habib Dolmen REIT Management and Javedan Corporation, in his address of welcome said the REIT instrument allows investors a fresh avenue of safe investment. This is also accessible to retail investors through listings.
He said REITs ensure fully documented real estate development activities in a transparent manner. REIT has an escrow account concept voluntarily securing customer advances for development as CDC is the Trustee of the Fund. It not only raises financial resources for development but also creates huge job opportunities through construction. It also contributes taxes to the revenues of the government, he added.
He said REIT makes conversion of open plots into developed properties adding value in economic activities by over two times of the value of land.
He said Arif Habib Group has so far registered 9 REITs in total with a fund of Rs 110 billion and REITs worth Rs 38 billion will be created in 2023. These together will create construction activities of over Rs 600 billion. “We are bumbled to have received a positive response to Global Residency REIT; being the first to list developmental REIT”, he added.
Furrukh Khan, CEO and Managing Director of PSX, in his speech congratulated Arif Habib at this landmark event where the first listing of a developmental REIT is taking place on the PSX.
He said situation at the capital markets needs to be addressed on a war footing. “We look forward to working with the Ministry of Finance and SECP to resolve some of the issues that are impacting the market”, he said.
He said PSX will continue to be at the forefront in its efforts to revitalize the capital market facilities all such projects such as listing of Global Residency REIT in the future as well.
Global Residency REIT (GRR) was listed on the PSX by Arif Habib Dolmen REIT Management Limited and 14 million units, which make up 10 percent of the total unit of the REIT Scheme were offered by Javedan Corporation Limited to the general public at a price of Rs 10 per unit. Offer for Sale of the REIT Scheme took place on December 14 and 15, 2022 and was oversubscribed by 2.77 times. Total size of the Fund is Rs 2.8 billion and Project Cost is expected to be Rs 20 billion. GRR is a closed ended, Listed Developmental REIT with a limited life of 48 months offering investors the opportunity to become Unit holders of Globe Residency apartments, 09 towers comprising of 1,344 apartments being constructed at Naya Nazimabad, Karachi.
Presidents of banks, senior management of SECP, PSX, CDC, NCCPL, Asset Management Companies and others were also present on this occasion. The gong ceremony was held at the main trading hall of PSX.
Copyright Business Recorder, 2022