KARACHI: Pakistan is hopeful the sale of its debut diaspora bonds, targeted at 8 million Pakistanis living abroad, will reap major dividends, officials and analysts told Arab News, and raise $1 billion in foreign currency to help shore up a balance of payments crisis.
Pakistan on Thursday announced its first ever, five-year, dollar-denominated diaspora bonds called Pakistan Banao Certificates aimed at attracting investment from overseas Pakistanis, many of whom live in the Middle East.
The bond has a minimum investment of $5,000 without any upper limit and comes in two maturities: a three-year bond with a coupon rate of about 6.25 percent and a five-year bond that carries a coupon of 6.75 percent.
“We want more people to take interest and participate because it is a historic chance to invest with the sovereign guarantee of the government of Pakistan,” finance ministry spokesman Khaqan Hassan Najeeb told Arab News.
Though it is an “ongoing process,” the government will close the sale of the certificates on June 30, at the end of the current fiscal year, he said.
“Our risk adjusted return is comparable with other options available to our target clientele,” Najeeb said. “Profit will be paid semi-annually in investor-nominated US dollar accounts maintained inside or outside Pakistan”.
A senior finance ministry official told the Financial Times last week that the government of Prime Minister Imran Khan hoped the new bond would raise $1bn in much-needed foreign currency revenues.
The launch of the bond comes at a time Pakistan is in talks with the International Monetary Fund to hammer out a bailout package, its 13th since the 1980s.
“The balance of payments crisis has eased but not ended. I appeal to overseas Pakistanis to invest in Pakistan,” Khan said during a press conference on Thursday.
At the launch of the bonds, finance minister Asad Umar said this was a “great opportunity for overseas Pakistanis to invest in a profitable certificate and participate in building a naya [new] Pakistan.”
Former finance minister Miftah Ismail said the launch of the bonds was a step in the right direction.
“Overseas Pakistanis must come forward to buy these certificates in large numbers since the profit is good and it will benefit Pakistan,” he told Arab News.