New York July 18 2022: Yields of Pakistan bonds and Sukuks floating in the international market continue to rise even after IMF staff level agreement, according to data available at Reuters.
Yields of both Pakistan International Sukuk and Pakistan International Bond having maturity of 5th December 2022 and 15th April 2024 are above 30%. The former trading at Yield to maturity (YTM) of 32.92% and the later at YTM of 32.71%.
Only 5th December 2022 maturity bond is trading 5.53% percent below from its peak that it touched a day before IMF staff level agreement while other bonds are trading at their peak levels, seems completely ignoring IMF program.
Pakistan Government International Bonds with maturity of 30th September 2025, 8th April 2026 and 5th December 2027 are trading at 25.94%, 23.28% and 19.59%.
On 14th July 2022, an International Monetary Fund (IMF) team, led by Nathan Porter, has finalized discussions for the combined seventh and eight reviews of Pakistan’s economic program supported by an IMF Extended Fund Facility (EFF).
Nathan Porter says, “The IMF team has reached a staff-level agreement (SLA) with the Pakistan authorities for the conclusion of the combined seventh and eight reviews of the EFF-supported program. The agreement is subject to approval by the IMF’s Executive Board. Subject to Board approval, about $1,177 million (SDR 894 million) will become available, bringing total disbursements under the program to about $4.2 billion. Additionally, in order to support program implementation and meet the higher financing needs in FY23, as well as catalyze additional financing, the IMF Board will consider an extension of the EFF until end-June 2023 and an augmentation of access by SDR 720 million that will bring the total access under the EFF to about US$7 billion.”
But added, “Pakistan is at a challenging economic juncture. A difficult external environment combined with procyclical domestic policies fueled domestic demand to unsustainable levels. The resultant economic overheating led to large fiscal and external deficits in FY22, contributed to rising inflation, and eroded reserve buffers.”