Pakistan targets 3-4 months of import cover for further credit rating improvement
SBP governor highlights stronger reserves as key to rating gains and outlines new 10-year export financing scheme at 2% for two years and 5% for eight years
Pakistan is taking steps to further improve its external credit rating, with higher foreign exchange reserves and stronger reserve coverage identified as key factors, State Bank of Pakistan Governor Jameel Ahmad said.
Ahmad said increasing foreign exchange reserves to the equivalent of three to four months of imports would be a positive signal for Pakistan’s credit rating.
He said improvements in the country’s domestic and external conditions, including the current account, external sector and broader fiscal and economic indicators, had contributed to the recent improvement in Pakistan’s rating.
The improved rating also helped Pakistan successfully issue a USD 3 billion Eurobond, with demand nearly twice the amount offered. The issuance included a USD 1.25 billion 10-year bond and a USD 1.75 billion 5.5-year bond.
Ahmad said the successful sale of the two bonds demonstrated international investors’ confidence in Pakistan.
Separately, the SBP governor said a new 10-year long-term financing scheme had been introduced for new export projects.
Under the scheme, financing will be available at a 2% interest rate for the first two years, followed by 5% for the next eight years. The rate will remain fixed for the entire financing period, shielding new export projects from fluctuations in interest rates.
The scheme is aimed at facilitating new export projects and helping existing businesses expand.
Ahmad also said short-term working capital financing for exporters had been increased. Around PKR 1,000 billion was disbursed under the export refinance scheme during the previous year, while its limit has now been increased to PKR 1,500 billion.
This represents an increase of around PKR 500 billion in short-term financing for exporters.
Exporters are currently being provided short-term financing at a 4.5% interest rate, which has been fixed for the entire financial year. Banks’ concessional financing for exporters will continue until June 30, 2027.
