KARACHI: Habib Bank Limited CEO Muhammad Aurangzeb said on Saturday that Pakistan should not take commercial loan relief after the devastation caused by floods across the country.
Addressing a conference organized by the Marketing Association of Pakistan, Mr. Aurangzeb said that failure to disburse about $9-10 billion in trade credit would shut the country out of international capital markets.
“We should not touch commercial loans, which makes perfect sense at the moment in a global context,” he said.
Commercial debt consists of funds borrowed by the sovereign from commercial banks or international bondholders. These are different from the loans that Islamabad has received from bilateral and multilateral sources such as foreign governments and international financial institutions.
Our external debt is $130 billion. About 80 percent of it is bilateral and multilateral.
According to the State Bank of Pakistan (SBP), the country’s total external debt at the end of 2021-22 was $130.2 billion. Trade loans of just over $10 billion constitute 7.7 percent of the country’s total dollar-denominated external debt.
Good things are coming from Islamabad. We are steadfast with the IMF program. “We are going to focus on bilat [bilateral] in terms of re-profiling our loans,” said the CEO of Pakistan’s largest commercial bank with assets of over Rs 4.3 trillion.
Mr Aurangzeb urged the government not to chase “deposits from friendly countries” – a recurring practice that involves depleting central bank reserves with funds from countries such as Saudi Arabia and the United Arab Emirates. Is.
“All this repo talk, it’s not going to happen,” he said, referring to the reserve build-up plan championed by former finance minister Miftah Ismail.
Under the proposed plan, which appears to have now been shelved, a friendly country was to acquire a 10-15 percent shareholding in state-owned companies with tradable shares on the stock exchange. The transaction was to be subject to a buyback agreement, which would give Islamabad the option – but not the obligation – to buy back the same shareholding at a 5 percent higher rate after a specified period.
“Let’s forget about it. We’re in a world where people are talking about hard investment. Give them equity investment, give them board seats, that’s how the investment is going to come,” he said. said
Mr. Aurangzeb said his focus from the recent IMF and World Bank meetings in Washington DC last week was that Pakistan is not the only country seeking relief from international creditors.
“There’s donor fatigue and then there’s the issue of multilateral bandwidth. My thought process coming out of those meetings was that we have to get our story together,” he said, urging stakeholders to at least flood. Present a credible story for “Where is Pakistan” in terms of the dollar amount needed for subsequent recovery?
“We should speak with one voice about what we need,” he said.
