ISLAMABAD, July 10: The government has declined an IMF offer to arrange another PRGF-type funding programme, deciding instead to float $250 million eurobonds by December this year enabling it to raise additional resources.

Sources told Dawn here on Thursday that senior resident representative of the IMF in Pakistan Henri Ghesquiere had met Finance Minister Shaukat Aziz on Tuesday last and asked him to consider another package ranging between $1.5 billion and $2 billion with conditionalities similar to the ones attached with the Poverty Reduction Growth Facility.

The finance minister is reported to have told the IMF representative that Pakistan was no longer prepared to accept new assistance programmes carrying tough conditionalities, adding that the country would readily accept fresh IMF funding arrangements if there were no “strings” attached to them.

Mr Aziz said that Pakistan’s foreign exchange reserves were likely to touch 11-billion-dollar mark before the end of 2003, therefore, it did not need any more Fund’s assistance on ‘difficult terms’.

Sources said that officials concerned of the ministry of finance had finalised a plan for issuing $500 million eurobonds for raising money, but the amount was reduced to $250 million on the instructions of the finance minister.

When contacted by this correspondent, the finance minister said that the government wanted to create an investors’ base by graduating from PRGF with a view to have market-based financing.

The market-based financing, Aziz said, was a pattern adopted by many of the developing states, including those of the Asean countries.

He said the government had worked out a strategy for floating eurobonds within this year. “A number of global investment banks have offered to sell these bonds on behalf of Pakistan and we will shortly be discussing with them terms and conditions like what would they charge,” he said. He added that Pakistan would offer the bonds to banks capable of selling them on a minimum commission rate.

The option of raising funds through bonds became viable after Pakistan received better credit ratings from international credit rating agencies, he added.

Earlier, the price of Pakistan eurobonds had risen from $0.6 to $1 between December 1999 and May 7, 2002 — an increase of 67 per cent.

Pakistan government issued eurobonds amounting to $620 million in November 1999 as part of debt restructuring agreed with the Paris Club. They carried an interest rate of 10 per cent and were repayable in four equal instalments in December last year.