KARACHI: Federal Finance Minister Ishaq Dar has declared that the government has initiated first step towards developing a thriving and deep debt market which plays a pivotal role in sourcing long-term finance for both the public and private sectors.
Addressing the launch of secondary market trading of government debt securities through Karachi Stock Exchange’s Bond Automated Trading System (BATS), Dar said that for the first time in the country’s history, investment and trade in government securities through capital market had been launched.
He pointed out that the country’s growth remained below potential for more than a decade due the focus of policies on consumption-led growth, adding that sustainable high economic growth could only be achieved if it was investment-led growth.
Dar asserted that investment-led growth entailed building up the basic infrastructure of the country which was need of the hour.
He noted that the debt capital market was not developed as compare to public equity market which was reasonably well-developed. The Finance Minister said the equity market in Pakistan had shown consistent performance in recent years. From May 2013 till date, the KSE-100 Index increased by 30 percent while the market capitalisation has risen from $50.33bn on May 11, 2013 to $61.32bn on February 14, 2014.
Dar averred that international agencies had declared Pakistan as the next most attractive investment destination despite prevailing challenges which reflected that the world viewed Pakistan’s potential positively. He said that trading of Pakistan Investment Bonds (PIBs) and Ijara Sukuks would be initiated soon and in future, the government intended to issue infrastructure bonds – both in the conventional and Shariah compliance mode – through capital market to provide opportunity to investors to participate in building up Pakistan’s infrastructure backbone. He revealed that the government was planning setting up a Pakistan Infrastructure Fund for future long-term infrastructure funding.
Earlier, KSE Chairman Muneer Kamal thanked the Finance Minister for his support in turning wider trading of government securities into a reality and stated that guidance and support from the SECP and SBP were greatly appreciated in the timely completion of the project. KSE MD Nadeem Naqvi gave a presentation on the benefits of investment in government securities for the individual investor and highlighted the procedure for investing in the securities. Acting SBP Governor Ashraf Mehmood Wathra and Central Depository Company (CDC) CEO Mohammad Hanif Jakhura also spoke on the occasion.
Meanwhile, addressing a ceremony organised by Pakistan Centre for Philanthropy (PCP), Dar said that the government had outlined six medium-term economic targets to raise GDP growth to around 6 to 7 percent in the next three years.
“We have identified medium-term economic targets, which we hope to achieve in three years,” the minister pointed out, adding that under these targets, investment-to-GDP ratio would be raised from 12.6 percent to 20 percent, tax-to-GDP ratio from 8.5 percent to 13 percent.
He elaborated that fiscal deficit would be brought down from 8.8 percent to 4 percent of GDP, foreign exchange reserves to be increased to around $20 billion and public debt to be reduced to below 60 percent of GDP as per statutory requirement.
The minister assured the PCP that the government would support all efforts aimed at poverty eradication, social development and promotion of philanthropy. The minister also announced a grant of Rs20 million for PCP on behalf of the Prime Minister. Sindh Governor Dr Ishratul Ebad, Chief Minister Syed Qaim Ali Shah, PCP Board of Directors Chairman Dr Shams Kasim Lakha and others also attended the award ceremony.
