KARACHI: Finance Minister Shaukat Tarin has said the government is planning to raise $1 billion via an Environmental, Social, and Governance or ESG-compliant Eurobond in March, international news service Bloomberg reported on Thursday.

The ESG-compliant debt instrument will help Islamabad raise a similar amount it generated through a sukuk issue last week.

Bloomberg reported that Mr Tarin, who negotiated the last leg of its current International Monetary Fund (IMF) loan, is targeting a budget shortfall of 5-5.25 per cent of GDP in 2021-22 while aiming for a GDP growth rate of 6pc.

Pakistan has sought almost 20 bailouts from the IMF for over half a century. It wants to end its reliance on the multilateral lender, Mr Tarin said, by shrinking deficits and tapping capital markets on its way to sustainable economic growth.

‘End to IMF bailouts possible by reducing deficits, tapping capital markets’

“I think this programme should be enough,” he told Bloomberg. “If we start generating 5-6pc balanced growth, which means sustainable growth, then I don’t think we need another IMF programme.”

The commitment to an IMF-free future comes as the lender this week agreed to resume a $6bn loan programme, which had been stalled since 2019 as Pakistan took steps to meet the loan conditions.

Prime Minister Imran Khan has been a vocal critic of IMF bailouts, saying “the begging bowl needed to be broken” if Pakistan is to command respect in the world. On its way to outgrowing the need for IMF help, the nation also prefers bilateral loans or commercial borrowings that don’t include austerity demands.

The first part of Mr Tarin’s plan to halt Pakistan’s boom-bust cycle involves boosting exports. The central bank offered cheap loans to manufacturers and energy tariffs were brought in line with the region, Bloomberg reported. Textile shipments — more than half of total exports — are poised to surge 40pc to a record $21bn in 2021-22 and further to $26bn next fiscal year, according to the prime minister’s commerce adviser.

Pakistan also plans to extend similar incentives to the technology sector as it seeks to ride a wave of global venture-capital interest in startups. The policies could be unveiled in about a month, Mr Tarin said.

Since his appointment in April 2021, the finance minister renegotiated some of the IMF’s financial conditions, including a smaller increase in utility prices and lower mop-up in taxes than the lender had earlier insisted on.

The government has adopted some of the structural conditions, which include increasing autonomy for the central bank and putting an end to deficit monetisation. Like predecessors, Mr Tarin hasn’t been able to significantly broaden Pakistan’s tax base or sell loss-making state-run firms, the international wire service noted.

Previous governments accepted IMF conditions in the short term and, when the programme ended, policymakers reverted to profligate spending, Mr Tarin said. Inst­ead, he vowed to “control our expenses” in the upcoming budget.

“We are trying to now take those steps, which are going to put this economy on an inclusive and sustainable growth path,” he said. “Once it gathers momentum and is sustainable, then I think we will probably see 20-30 years of growth.”

Published in Dawn, February 4th, 2022